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When Should You Start Saving for Retirement? The Real Cost of Waiting (US, 2026)
Start saving for retirement as soon as you have earned income. Time does most of the work: $300 a month at 6% grows to about $597,000 by 65 if you start at 25, $301,000 if you start at 35 and $139,000 if you start at 45. A common order: 1) contribute enough to your 401(k) to get the full employer match; 2) pay off high-interest debt; 3) fund a Roth IRA (up to $7,500 in 2026); 4) if eligible, an HSA; 5) go back and raise 401(k) contributions toward the $24,500 limit. Young, lower-income savers often favor Roth accounts because their tax rate is likely lower now than later.
The short answer: now
The best time to start saving for retirement was your first paycheck. The second-best time is today. That's not a slogan; it's arithmetic.
What waiting really costs
Here's what $300 a month grows to by age 65 at a 6% average annual return:
| Start at age | Total you contribute | Value at 65 |
|---|---|---|
| 25 | $144,000 | about $597,000 |
| 30 | $126,000 | about $427,000 |
| 35 | $108,000 | about $301,000 |
| 40 | $90,000 | about $208,000 |
| 45 | $72,000 | about $139,000 |
| 50 | $54,000 | about $87,000 |
Starting at 25 instead of 35 means putting in $36,000 more but ending with nearly $300,000 more. That gap is compounding: your returns start earning returns. See compound interest explained.
If you're past 35, don't let this table discourage you. It just means you'll need to save more per month. See starting retirement savings at 50.
Why Social Security isn't the whole plan
Social Security replaces roughly 40% of pre-retirement income for an average earner, and less for higher earners. Most financial planners suggest aiming for 70% to 80% of pre-retirement income in retirement. Your savings fill the gap. Our guide to how much you need to retire shows how to estimate your number.
The order to fill your accounts
2026 limits come from the IRS. A widely used order:
| Step | Account | 2026 limit | Why |
|---|---|---|---|
| 1 | 401(k) up to the full match | — | Instant 50%–100% return |
| 2 | Pay off high-interest debt | — | A guaranteed 20%+ "return" on credit cards |
| 3 | Starter emergency fund | — | Keeps you from raiding retirement accounts |
| 4 | Roth IRA | $7,500 | Tax-free growth; contributions can be withdrawn anytime |
| 5 | HSA (if you have a high-deductible health plan) | $4,400 self-only | Triple tax advantage |
| 6 | Max the 401(k) | $24,500 | Larger limit; possible Roth 401(k) option |
| 7 | Taxable brokerage account | No limit | Flexibility for extra savings |
You don't need to max everything. Most people work through the first few steps over years.
Roth or traditional when you're young?
- Traditional (pre-tax): tax break now, taxed when you withdraw.
- Roth (after-tax): no break now, tax-free growth and withdrawals later.
The question is whether your tax rate is lower now or in retirement. For many people in their 20s and early 30s, earning less than they will later, Roth wins. Roth IRA contributions (not earnings) can also be withdrawn any time without tax or penalty, which makes them a flexible backstop. Compare in Roth IRA vs 401(k) and Roth vs traditional IRA.
Ways to make starting easier
- Automate it. Payroll deductions and automatic transfers remove the decision.
- Start small, raise it often. Many 401(k)s offer automatic 1%-a-year increases.
- Save your raises. Put half of each raise toward retirement before you get used to spending it.
- Check for the Saver's Credit. Lower-income savers can get a federal tax credit for contributing.
- Teens with jobs can start too. A parent can open a custodial Roth IRA for a minor with earned income.
Invest it, don't just save it
Retirement money in a savings account won't do the compounding shown above. Inside a 401(k) or IRA, most beginners do well with a single target-date index fund or a simple mix of low-cost index funds. See how to open a Roth IRA and target-date funds explained.
The bottom line
Start saving for retirement with your first paycheck, even if it's $50 a month. Grab the full 401(k) match, kill high-interest debt, then use a Roth IRA and raise your savings rate over time. Every year you start earlier is worth more than almost any investment choice you'll make.
This article is educational and not personalized financial or tax advice.
Frequently asked questions
What is the best age to start saving for retirement?
As early as you have earned income. Even small amounts in your teens and 20s have 40+ years to compound. A teenager with a summer job can open a custodial Roth IRA and contribute up to what they earned that year.
How much should I save for retirement in my 20s?
A common guideline is 10% to 15% of gross pay, including any employer match. If that's not possible, start with enough to get the full match and raise your contribution by 1 percentage point each year or with every raise.
Should I start with a 401(k) or a Roth IRA?
If your employer offers a match, contribute enough to the 401(k) to get all of it first; that's an instant return. After that, many young savers fund a Roth IRA for its flexibility and tax-free growth, then return to the 401(k).
Is it better to pay off student loans or save for retirement?
Usually both. Always get the employer match. Then compare the interest rate: debt above roughly 7% to 8% is often worth paying down faster, while low-rate federal loans can be paid on schedule while you invest. Some employers now match student loan payments into your 401(k) under SECURE 2.0.
What if I can only save $50 a month?
Start anyway. $50 a month from 22 to 65 at 6% grows to roughly $120,000. More importantly, it builds the habit, and you can increase it as your income grows. Lower-income savers may also qualify for the federal Saver's Credit.
Will Social Security be enough?
For most people, no. Social Security replaces roughly 40% of pre-retirement income for an average earner, and less for higher earners. Personal savings fill the rest.
Primary sources
Data & disclaimer: This article is for educational purposes only and is not financial or investment advice. Figures reflect data available as of Oct 25, 2026, and conditions change — always confirm current pricing, rates and rules with the provider before you act. Written by Elizabeta Dimoska. See our editorial standards and disclosure.
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