How To Save for Retirement: A Guide for Each Decade

Saving for retirement looks different as you age and experience various life events. Knowing what you can do in each decade of your life to prepare can help eliminate the feeling of being overwhelmed. Additionally, it can help you get one step closer to the lifestyle you desire during your retirement years.

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  • Written By
    Stephen Kates, CFP®

    Stephen Kates, CFP®

    Principal Financial Analyst for

    Stephen Kates, CFP® is a personal finance expert specializing in financial planning and education. He serves as the Principal Financial Analyst for, where he delves into industry trends to support consumers and financial advisors on wealth management, annuities, retirement planning, and investing.

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    Christian Simmons, CEPF

    Christian Simmons, CEPF

    Financial Writer, Certified Educator in Personal Finance

    Christian Simmons is a financial writer who has worked professionally as a journalist since 2016. As an active member of the Association for Financial Counseling & Planning (AFCPE), Christian prides himself on his ability to break down complex financial topics in ways that readers can easily understand.

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  • Edited By
    Michael Santiago
    Headshot of Michael Santiago, senior editor for

    Michael Santiago

    Senior Financial Editor

    Michael Santiago is a skilled writer and editor with over a decade of experience in various industries. As a senior financial editor, he collaborates with a team of experts to develop compelling and accurate content.

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  • Financially Reviewed By
    Barbara O’Neill, Ph.D., CFP®, AFC®, CRPC®
    Barbara O’Neill, Ph.D. CFP®, AFC®, CRPC®

    Barbara O’Neill, Ph.D., CFP®, AFC®, CRPC®

    Owner and CEO of Money Talk

    With an extensive 41-year tenure at Rutgers University, Barbara O'Neill has established herself as a highly knowledgeable personal finance expert. As a Certified Financial Planner™ and Accredited Financial Counselor™ professional, she possesses a wealth of expertise in the field. She currently serves as the owner and CEO of Money Talk, where she actively engages in writing, speaking and reviewing personal finance content. In 2020, she notably authored the book Flipping a Switch, delving into various aspects of personal finance.

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  • Updated: November 17, 2023
  • 13 min read time
  • This page features 6 Cited Research Articles

Key Takeaways

  • There are opportunities to save and enhance your retirement strategy at any age. The key is to take action.
  • Early savings can go a long way towards building a strong retirement, but just because you aren’t in your 20s, doesn’t mean you don’t have time to hit your goals. 
  • Understanding the rules and options available to you will allow you to be strategic with saving and investing. 

The sooner you begin saving for retirement, the longer your money has to appreciate and grow. However, knowing exactly how to save for retirement at a young age and at other stages of life can be overwhelming if you don’t know where to start. Look through this guide to learn what you can do during each decade of your life to prepare for your retirement years.

Financial planning is a journey that spans many decades. At each life stage, there are multiple financial challenges and opportunities. Retirement savings should reach a larger multiple of income at every decennial milestone (e.g., 3x at age 40 and 8x or more at age 60). The actions that people take in early young adulthood (e.g., funding a 401(k) or IRA) will lay the financial foundation for their ”future self” in later life.

How To Save in Your 20s

The time value of money is the concept that over time, your money will grow and compound, resulting in exponentially more wealth the longer it is allowed to grow. Consequently, saving earlier in life increases the time your investments work for you, potentially providing more funds for retirement.

At this stage of life, it can be tempting to focus on paying off debt, making fun purchases or spending money on inconsequential things. However, consistently setting money aside for retirement is one of the best gifts you can give yourself in the long run. 

When considering how best to optimize your spending and saving, approach your plan by asking yourself, “where can my next dollar provide the most benefit?” A 401(k) match can provide you with a dollar-for-dollar benefit. Even a 25% or 50% match is a great return. Paying down high interest debt, like a credit card balance, may make more sense than investing in a mutual fund. Each dollar has an opportunity cost, and minimizing that will allow your money to work hard for you over the next decades of your life.  

Choose Your Retirement Account(s)

There are a variety of retirement accounts to choose from. This can make navigating through the benefits, returns and tax considerations difficult, particularly if you have no experience with investing.


The most common retirement accounts you can invest your money in are 401(k)s and IRAs.

Familiarizing yourself with your options will make the process of saving and investing easier. Learning as much as you can about a few of the most common accounts available to you by talking with financial professionals or reading books written by experts can help you understand which option is best for you. While there are many types of retirement accounts, you’re likely to hear about the four main ones most often.

The Four Most Common Retirement Accounts

This is an employer-sponsored retirement account, which means you’ll only have access to it through an employer. Many companies also match the amount you contribute up to a certain percentage. Depending on the type of account you have, you’ll either pay income tax when you withdraw the funds once you’re 59 ½, or you’ll pay taxes on the money before it enters your 401(k) account. You can contribute up to $22,500 to this account in 2023 or up to $30,000 if you are 50 or older.
Traditional IRA
Individual Retirement Accounts (or IRAs) have greater limitations than 401(k) plans. You can only contribute $6,500 for 2023 or $7,500 if you are 50 or older; however, IRAs are not employer-sponsored. Under certain income limits, taxes on Traditional IRA contributions are deferred until you withdraw the funds after reaching the age of 59 ½.
Roth IRA
Unlike a traditional IRA, contributions made to a Roth IRA are taxed before entering the account. When it’s time to begin withdrawing your funds after age 59 ½, no taxes will be owed on accounts open for at least five years because they have already been paid.  Roth IRAs have income limits that may bar certain high earners from contributing.
Simplified Employee Pension IRAs were created with entrepreneurs, small business owners and self-employed individuals in mind. This is a type of traditional IRA that allows small business owners and their employees a chance to save for retirement.

Save Consistently

Getting in the habit of saving isn’t the most enticing thing to do when you’re fresh out of college and earning your first real paycheck. However, the sooner you learn how to automate your savings, the easier it will be to put money away for retirement.


Set up recurring automatic payments to avoid forgetting to invest each month.

Build an Emergency Fund

An emergency fund acts as a safety net if you were to lose your income. A typical recommendation is to have three to six months’ worth of savings; however, you can increase this amount as you see fit. These expenses include your rent or mortgage payments, food costs, debt payments and anything else necessary for survival.

It can be helpful to dedicate a specific savings account for this purpose, ensuring it’s not mixed in with your monthly spending money. This will eliminate some of the temptation to spend it on non-emergency expenses like dining out or shopping.  Choosing a High-Yield Savings Account or Money Market Account will give you a leg up as you build your savings due to most accounts offering higher than average rates of interest. 

Example of a finance vision board

How To Save in Your 30s

By age 30, you’re likely on a chosen career path and have a sense of your financial direction. You may also have a small amount of retirement savings built up; however, if you’re not in this position, you have time to work on saving for your later years.

Savings benchmarks can help you determine if you’re on track or need to play a little catch-up. Experts recommend having savings ranging from one to one-and-a-half times your salary by the age of 35. Below are a few ways you can prepare for retirement while in your 30s.

Increase Your Emergency Fund

As you age and your life changes, your emergency fund should follow suit. Having enough money in your emergency fund will allow you to fall back on something other than retirement savings if you lose your income.


Set aside enough money for 3-6 months’ worth of expenses so you won’t dip into your retirement funds.

Getting married, having children or moving to a more expensive home are all things that may require you to increase these savings. Rather than putting your retirement savings on hold to increase these emergency funds, consider picking up a side hustle or passive income opportunity to supplement your earnings and thus increase your emergency stash. Opting for a High-Yield Savings Account or Money Market Account will provide an advantage in building your savings, as most of these accounts offer interest rates higher than the average.

Increase Your Retirement Savings

While it may seem easier said than done, there are a few things you can start doing to increase your monthly retirement contributions:

  • Cut down on spending: Separate your savings and spending into different accounts to prevent overspending from your “available” money.
  • Stick to a budget: Identify your savings goals and devise a plan to achieve them. Work backward to determine what remains for your spending.
  • Eliminate debt: Utilize the avalanche method to tackle debts, starting from the highest interest rate to the lowest.
  • Invest more aggressively: While savings accounts are beneficial, consider transferring excess savings to a brokerage account for investment.
  • Pick up a side job or side hustle: Take advantage of the ease of freelancing, especially with the convenience of remote work.
  • Ask for a raise: Document your contributions and achievements for negotiation purposes. If the answer is no, inquire about necessary changes and create an action plan with your manager. 

Use this side-hustle savings tracker to view your progress as you go.

A document for you to track the success of your side hustle

How To Save in Your 40s

A standard benchmark for your retirement savings at 40 is to have three times your annual income saved. This is a time when promotions and salary increases are often present, so don’t be afraid to increase your saving goals as well.

Reevaluate Your Goals

Reevaluating goals in your 40s can help you identify areas of improvement while you still have time to adjust. By this time of your life, you should have a clear idea of your financial trajectory and if you’re likely to reach retirement when you plan to.

If you’re not sure where you stand, talk with your financial advisor. They should be able to pinpoint weak spots in your financial plan, what goals you’re close to accomplishing and how you can utilize your money most effectively before you retire.

Take Risks With Your Investments

If you’re planning to retire closer to 60 or 65, you still have around 20 years before you will utilize your savings for retirement. Capitalize on that time by investing with purpose. Short term volatility in your portfolio from a drop in the market won’t derail your long-term strategy. You have plenty of time to recover if your investments perform negatively. Having a diversified portfolio, a mix of investments split between different risk levels, can also help mitigate the risk of losing all your funds if one or two areas of your portfolio perform badly at any given time.


Taking risks early on can lead to great rewards, but avoid this when you get close to retirement age.

Likewise, if your investments in more aggressive or higher risk accounts perform positively, you’ll be more prepared for retirement. Continuing to rebalance between your more aggressive and more conservative portfolio elements will allow you to limit shocks to your nest egg. 

As attractive as it can be to settle for a slow and steady savings account, don’t get too conservative with your investments in your 40s. You may be getting somewhat closer to retirement, but you’re still many years away.

How To Save in Your 50s

By this point in your life, you should have at least six times your annual salary saved for retirement, if not more. This is also a good time to evaluate your health and how you anticipate it will be in the coming years. By considering this factor now, you’ll be better prepared for the years ahead.

Take Advantage of Catch-Up Contributions

Catch-up contributions are a way for people with limited retirement funds to invest additional money into retirement accounts each year. Limitations set on accounts vary, with the 401(k) limit at $22,500 for 2023 and the IRA limit at $6,500. If you are 50 or older and behind on retirement savings, you are legally allowed to contribute an additional:

  • $7,500 to a 401(k)
  • $1,000 to an IRA

This means that each year you can contribute a total of:

  • $30,000 to a 401(k)
  • $7,500 to an IRA

By maxing out these contributions, you’ll have more money collecting interest in the years before you retire, as well as more income to live off of when it’s time to withdraw your funds.

Prepare for Future Medical Costs

Consider your current health and how it may be 10 or 15 years from now. Understanding the funds you’ll potentially need for health care costs down the road can give you a more accurate depiction of your expenses during those retirement years.

You’ll also want to take into consideration the cost of living if you anticipate that you’ll someday need additional help with everyday activities. According to the Genworth Cost of Care Survey, the median cost of in-home care services and assisted living facilities amounts to roughly $4,500 a month, while the median cost of a nursing home reaches upwards of $8,000 a month for a semi-private room and almost $9,000 a month for a private room. Make sure you’ll have enough retirement savings to afford these services if the need arises.

HSAs can be a powerful health care and retirement savings tool if they are available to you. Moreover, if long-term care is a concern, consider exploring options to mitigate that risk by investigating long-term care insurance or hybrid life insurance policies.     

Happy, retired couple

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How To Save in Your 60s

When you hit age 60, it’s recommended to have eight times your salary saved. However, some financial advisors recommend having up to 11 times your annual salary saved. This amount greatly depends on how aggressively you invested your money in the previous decades and how early you began saving.

Prepare for Your Retirement Budget

Now that retirement is on the horizon, it’s time to prepare for what’s ahead. This includes creating a practical retirement budget for when you stop working. This budget should outline your estimated monthly expenses like food and living space, as well as your “fun money” that is used for non-essential expenses.


Create a plan for how you’ll spend the money you’ve saved.

If you feel your retirement lifestyle will be less comfortable than your current circumstances, consider living off your projected retirement budget now. This will help you adjust and be prepared for the realities of your post-work life (it may also allow you to prioritize saving more).

Likewise, if you find that your retirement lifestyle doesn’t meet your expectations, don’t be afraid to work longer or pick up a part-time job after you retire to supplement your retirement income. Working part-time can have a multiplier effect on your savings because it means you withdraw less, and your investments can continue to grow. 

Delay Social Security Payouts

To receive the full amount of Social Security benefits, you need to wait until full retirement age, or age 67 if you were born in 1960 or later. While you can begin receiving benefits as early as 62, doing so reduces your benefit each month by about 30 percent of the amount you would receive if you deferred your payments until full retirement age. On the other hand, benefits increase by as much as 8 percent each year you delay receiving the benefits after age 67 up to a maximum limit at age 70.

Plan Your Retirement Fund Distribution Strategically

Pulling money out of retirement accounts strategically can increase your savings and prevent you from losing hard-earned money. There are a few ways to do this but one of the most common ways is by purchasing an annuity.

An annuity is a contract between you and an insurance company. You pay the company a lump sum, and in turn, they send you periodic payments of a certain amount. This can help eliminate overspending and potentially increase earnings from your saved money.


Knowing how to save for retirement is important in each phase of your life. There are actions you can take in your 20s, 40s and even 60s as you prepare for your later years. Utilizing retirement accounts when you’re young can give your money time to appreciate. Likewise, taking advantage of catch-up contribution options in your 50s will help you get on track if you’re behind.

Understanding how to plan for retirement at every stage of life will help ensure you have the retirement lifestyle you want when you’re done working. If you’re unsure how to best act on any of the topics mentioned above, talk with a financial advisor who can answer your questions and help you set up an ongoing retirement plan that shifts as you age.

Not sure how to keep track of your progress? Use the worksheet below to track your wins and losses each month of the year.

A document with a chart to be used for goal tracking each month

Frequently Asked Questions About Saving Through the Decades

 How much do I need to save to be able to retire?

There is no one amount that will match everyone. Your total savings should be enough to support your lifestyle.  The larger your intended spending, the larger your nest egg will need to be. A good starting point is aiming for 85% of your pre-retirement expenses, but this will take fine-tuning to truly match your retirement vision.

What should I do if I’m starting to plan and save late in life? 

It is important to be diligent about making up for lost time. If you feel like you’re late to the game, build a plan and figure out how to execute it effectively. Determine what your lifestyle costs will be in retirement, and work backwards towards determining the total savings you’ll need. Engage with a financial planner if you need support to stay on track.  

How much should I expect Social Security to contribute to my income?

Social Security is only one aspect of a retirement plan and typically won’t cover more than about 40% of the average household’s retirement income. Log onto the Social Security Administration site to determine what your expected benefits will be. 

Please seek the advice of a qualified professional before making financial decisions.
Last Modified: November 17, 2023
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