Retirement Planning Tips for Your 20s Through Your 60s

Advertising disclosure: Some links in this article are provided by our sponsors. We aim to deliver accurate, dependable information. Learn more about how we earn money and choose our advertising partners.

You probably already know that the sooner you start saving for retirement, the better. But for many people, the issue is not a lack of understanding about compound growth. They begin too late because their paychecks only go so far.

More than 1 in 5 Americans ages 30 to 60 have no retirement savings, according to The Penny Hoarder’s State of Retirement report. In addition, 28% cut back or paused retirement contributions in the past year to cover everyday expenses.

Whether retirement is decades away or close on the horizon, saving and investing can make those years far more comfortable. Below, we break down how to save for retirement in each decade and the obstacles you may face along the way.

How Much Should You Save for Retirement?

A common guideline is to set aside 10% to 20% of your pre-tax income for retirement. In reality, the amount you need depends on several factors, including:

• Your age. If you start late, you’ll likely need to save more.
• Whether your employer matches contributions. The 10% to 20% range assumes your employer match is included. If your company matches dollar for dollar, you may be able to contribute less on your own.
• How aggressively you invest. Higher risk can mean higher returns, but losses will also be steeper if the market falls.
• How long you expect to be in retirement. It’s impossible to know exactly how long you’ll live or work, but if you plan to retire early or have a family history of longevity, you may need to save more.

Need More Money to Support Retirement?

Whether you’re close to retirement or still far from it, extra income can help strengthen your savings. From short surveys to sharing your honest opinion, some easy-money ideas could give your retirement fund a boost.

How to Save for Retirement at Every Age

Now that you’re ready to begin, here’s a decade-by-decade look at strategies for making retirement a priority.

Saving for Retirement in Your 20s

Money invested in your 20s has more time to grow than money invested in your 30s or 40s. The challenge is that entry-level pay often leaves little room to invest, especially if you’re also dealing with student debt.

Prioritize Your 401(k) Match

If your employer offers a 401(k), 403(b), or another retirement plan with matching contributions, try to contribute enough to capture the full match — unless doing so would make it hard to cover your bills. The stock market has historically returned about 8% a year on average, but a 50% employer match is an immediate 50% return on your contribution before the money is even invested. That’s free money few people would walk away from.

Pay Off High-Interest Debt

After securing the employer match, focus on eliminating any high-interest debt. We also have a step-by-step guide for paying off credit card debt.

Take More Risks

We’re not suggesting you put your money into highly speculative bets like bitcoin or the penny stock your cousin keeps raving about. But when you start investing, you’ll likely be asked questions about risk tolerance. Take on as much risk as you can handle emotionally, which usually means holding mostly stocks with a small share in bonds. Don’t obsess over a market crash. At this stage, missing out on growth is the bigger risk.

Build Your Emergency Fund

Setting aside three to six months of expenses in an emergency fund helps protect your retirement savings. That way, you won’t need to tap your nest egg during a financial crunch. This money should not be invested. Good places to keep it include:

• High-yield savings accounts
• Money market accounts
• Certificates of deposit (CDs)

Keep Lifestyle Inflation in Check

Enjoy the raises you earn, but don’t let spending rise with every pay bump. Commit to investing a set portion of each raise and use the rest however you like.

Saving for Retirement in Your 30s

If you’re only beginning to save in your 30s, it’s not too late. You still have roughly three decades before retirement, but it’s important not to put things off any longer. Saving may be more difficult now if you’re also raising children or paying a mortgage.

Invest in an IRA

Opening a Roth IRA is a smart way to supplement your retirement savings if you’ve only been contributing to a 401(k) so far. A Roth IRA can be especially appealing because qualified withdrawals in retirement are tax-free.

The annual contribution limit is $7,500 for people under 50. You can contribute for a given year up until tax day of the following year. If you earn too much to contribute to a Roth IRA, or if you prefer the tax break now rather than later, a traditional IRA may be a better fit.

With a 401(k), your investment options are limited. An IRA gives you more flexibility to invest in stocks, bonds, mutual funds, or exchange-traded funds (ETFs) of your choice.

Avoid Mixing Retirement Money With Other Savings

You can borrow from a 401(k) for a home purchase, and Roth IRA rules allow some flexibility for a first-time home purchase or college tuition. You can also withdraw your contributions at any time. But that doesn’t mean you should.

The obvious downside is that your money leaves the market before it has time to compound. There’s another drawback too: it becomes difficult to tell whether you’re on track for retirement when your Roth IRA is also serving as a college fund or down payment account.

Open a 529 Plan While Your Children Are Young

Your own retirement should come before saving for your children’s college costs. But if your retirement plan is already on solid ground, opening a 529 plan is a smart way to save for education. It keeps that money separate from your retirement savings and may help you avoid dipping into your nest egg later.

Stay Invested When the Market Falls

The S&P 500, which represents about 80% of the U.S. stock market, ended 2025 with a 16% gain. Still, major market slumps such as the March 2020 COVID-19 crash happen about once every decade.

If a prolonged downturn or crash hits while you’re in your 30s, it may be the first time you’ve invested enough to see your net worth fall noticeably. Don’t panic. Avoid cashing out, keep dollar-cost averaging, and continue investing as usual even when it feels uncomfortable.

Is Your Bank Holding You Back?

Got $1,000 sitting in checking? These smart moves could help you reach your next major savings goal.

Saving for Retirement in Your 40s

If you started early, you may already have a healthy nest egg by your 40s. If you’re behind, though, now is the time to increase your efforts. You still have plenty of time left, but you’ve missed out on those early years of compounding.

Keep Taking Enough Risk

You may feel less comfortable with risk in your 40s, but you likely still have about two decades before retirement. Your money still has time to grow — and needs that time. Stay mostly invested in stocks, even if watching the market fall feels more unsettling now than it once did.

Put Retirement Ahead of College Costs

You can only realistically help pay for your children’s college if your own retirement is on track. Talk early with your kids about what you can afford, and discuss other ways to avoid excessive student debt, such as choosing a less expensive school, seeking financial aid, and working while attending classes. Your retirement funding options are much more limited.

Keep Your Mortgage

Mortgage rates change from week to week. Because investing usually offers much higher potential returns, extra cash is often better directed toward retirement accounts. If a refinance would lower your rate, it may be worth considering.

Invest Even More

If you can afford it, now is the time to increase your contributions. Continue to get the full employer 401(k) match. After that, try to max out your IRA contributions. If you still have money left to invest, consider putting more into your 401(k), or use a taxable brokerage account if you want more flexibility.

Meet With a Financial Adviser

Your 40s are roughly the halfway point of your working life, making this a good time to consult a financial adviser. If that isn’t affordable, a financial counselor may cost less and can help with budgeting and debt repayment rather than investment advice.

The 5 Dumbest Things We Keep Spending Too Much Money On

You’ve already done what you can to trim expenses. You make coffee at home, avoid Target, and refuse to buy avocado toast. (Yes, that millennial sarcasm is intentional.)

Even so, you’re still stuck with the unavoidable monthly bills.

You know the ones: rent, utilities, cell phone service, insurance, groceries…

Ready to stop overpaying? Try these moves…

Saving for Retirement in Your 50s

By your 50s, retirement no longer feels far away. Maybe that’s exciting, maybe it’s stressful — but either way, this is the ideal time to decide when you want to retire and what you want those years to look like.

Review Your Asset Allocation

In your 50s, it may make sense to shift more of your portfolio into safer assets such as bonds or CDs. Your money has less time to recover from a market downturn. Still, you should remain invested in stocks so your savings can keep growing. Just remember that bonds and CDs usually don’t keep up well with inflation.

Use Catch-up Contributions

If your retirement savings are lagging, catch-up contributions can give them a helpful lift. The following extra contributions are available:

• $1,100 extra to a Roth or traditional IRA once you’re 50, or split between the two
• $8,000 extra to a 401(k) and most other workplace plans once you’re 50
• $1,000 extra to an HSA once you’re 55

Work More if You’re Behind

Your window for catching up is getting smaller, so if you’re behind, think about ways to bring in more income for retirement savings. A side hustle, freelance work, or overtime may all help. Even if you plan to work for another 10 or 20 years, many people are forced to retire earlier than expected. It helps to earn as much as you can while you’re able.

Pay Off Remaining Debt

Since this is often the stage when people begin shifting away from high-growth investing and toward safer assets, extra money may be better used to eliminate lower-interest debt, including the mortgage. Retirement is much easier to enjoy when you’re debt-free.

Saving for Retirement in Your 60s

You’ve made it. After decades of work, your retirement goals may finally be within reach. Still, you have major decisions ahead. Someone in their 60s could easily spend another two or three decades in retirement. The challenge now is making sure your savings last.

Create a Retirement Budget

Begin building your retirement budget at least a couple of years before you stop working. Financial planners often suggest replacing about 70% to 80% of your pre-retirement income. Common sources of income for retirees include:

• Social Security benefits. For the average retiree, monthly benefits replace about 40% of pre-retirement income.
• Retirement account withdrawals. This includes money taken from accounts such as a 401(k) or IRA.
• Defined-benefit pensions. These are increasingly uncommon in the private sector, but they remain more common among public-sector retirees.
• Annuities. Though debated in personal finance circles, annuities can make sense for people worried about outliving their savings.
• Other investment income. Some retirees supplement income with real estate earnings or dividend stocks.
• Part-time work. Working part time can delay withdrawals and give your savings more time to grow.
• Reverse mortgages. If you own your home outright or have substantial equity, a reverse mortgage may provide additional income.

You can expect some costs to disappear. For example, you may no longer pay payroll taxes or retirement-plan contributions, and your mortgage may be gone. But you should avoid assuming dramatic cuts across the board.

Even if some expenses fall, health care tends to consume a large share of senior income, even with Medicare, and those costs generally rise faster than inflation.

We Dare You to Take Control of Your Debt

Up for a debt challenge?

In 10 days, these 10 practical steps could help put you back on track financially.

Develop Your Social Security Strategy

You can begin taking Social Security benefits as early as 62 or wait until 70 to maximize them. The earlier you claim, the smaller your monthly checks will be. If your retirement savings are limited, delaying as long as possible is usually the best move. Benefits at 70 can be about 77% higher than benefits claimed at 62. That said, if you have serious health issues, claiming earlier may make more sense.

Figure Out How Much You Can Withdraw

Once you’ve built a retirement budget and estimated your Social Security income, you can calculate how much you can safely withdraw from your retirement accounts. A common rule of thumb is the 4% rule: withdraw no more than 4% of your savings in the first year, then adjust for inflation.

If you have a Roth IRA, you can let the money grow as long as you like and then withdraw it tax-free. Traditional IRA owners must take required minimum distributions, or RMDs, starting at age 73 — and you can delay 401(k) RMDs until retirement. These required withdrawals are based on life expectancy.

The penalty for missing them is steep: the IRS can charge 25% of the amount you should have withdrawn, plus income tax.

Keep Investing While You’re Working

Try not to withdraw money from retirement accounts while you’re still employed. Once you’re over 59 1/2, you won’t face the early withdrawal penalty, but it’s still best to leave the money alone for as long as possible.

Continue contributing to retirement plans while you still have earned income, but do so carefully. Keep money you’ll need within about five years out of the stock market, since there may not be enough time to recover from a downturn in your 60s.

Final Thought: Make Retirement About You

Whether you’re still working or already enjoying retirement, the most important lesson is this: put yourself first. That means your retirement savings goals should come before helping family members financially or paying college costs for children or grandchildren. No one else will step in if you reach retirement with too little saved.

Most people spend decades preparing for retirement. The earlier you begin planning, the less stressful it is likely to be.