Best Time to Start Saving for Retirement

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Contributor, Benzinga
December 13, 2021

Have you ever thought of how much money you’ll need to retire? Or how much and when you would need to save for retirement? If you’ve ever asked yourself questions like “when should I start saving for retirement?” then this article may give you answers that anyone currently in the workforce would do well to consider, regardless of their present age. 

Keep in mind that everyone is different and each person has their own particular situation since everyone has different goals and aspirations. Saving for retirement can begin at any time, although depending on who you ask, you’ll get varied responses from different people on when and how to go about saving for your retirement. 

The following sections cover when to start your retirement saving plan, how to save for retirement and who should be saving for retirement. Benzinga also ranks the best retirement investment services so you can choose one that suits you best.

When to Save for Retirement

Ideally, you would want to begin saving for retirement after starting your first job, although that would probably seem unrealistic and a rather low priority for many young people in their 20’s and early 30’s, especially if they also have to pay for housing expenses.

Even though saving at a young age might seem impractical for most younger people, the earlier you plan for your retirement, the more you can take advantage of interest rates and the power of compounding to boost your retirement savings nest egg.

Also, the older you get, the more urgent saving for retirement becomes, so it really makes sense to get started as soon as practically possible. The following section will discuss some strategies for each age group when it comes to retirement savings. 

How to Save for Retirement

A few top saving options exist that just about everyone contemplating retirement at any age should familiarize themselves with. These include:

(1) Take advantage of matching funds from employers.

 If your employer sponsors a retirement plan where it matches some amount of the funds you contribute to it, such as a 401(k) account, then that should be the first place to send your retirement money. Since employer matching will usually have a fund limit, you can consider other savings options once you have received the full match amount. 

(2) Open an Individual Retirement Account (IRA).

After maxing out employer-matched funds with a 401k account, you can then consider contributing up to $6,000 per year in 2021 and 2022 if you are under age 50 to an IRA. If you are 50 or older, then you can contribute up to $7,000 annually to an IRA in those years. You can select either a traditional IRA or a Roth IRA, each of which has pros and cons. Benzinga compares both retirement account types thoroughly in this article

(3) Make more contributions to an employer retirement plan.

If you still want to save more for retirement after having already maxed out the initial matched amount of 401(k) funds and made your allowable IRA contributions, then you can return back to contributing to your 401(k) account or another employer plan and continue making retirement contributions there.

Furthermore, the best way to save for retirement will depend to some extent on how old you are. For example, younger people in their 20’s and early 30’s can use the IRA or 401k account types to store their retirement investments to take advantage of the notable benefits that such accounts provide, including employer fund matching and the deferral of some taxes.

Younger people might also do well to invest in growth stocks with the goal that their invested money will increase substantially in value over time to help make their retirement more comfortable and well-funded. 

As you get older, you will probably need to be more aggressive about your retirement preparations. For example, you may want to put even more of your general savings into retirement accounts as your retirement date nears.

You might want to select a suitable life insurance policy to cover your loved ones in the event of your death. Some people choose to use annuities to provide an income stream for life in return for a fixed lump sum payment and/or reverse mortgages to use the equity in their homes to help finance their retirement. 

As you approach retirement, you could consider trimming your budget to focus on the essentials of life and start designing a practical post-retirement lifestyle for yourself. This action lets you save more money and learn how to live comfortably on the money you have already saved once you actually retire.

Budget trimming might include downsizing your living space. For example, kids are generally out of the house when you turn 55, so you can sell the bigger family home and buy a smaller condo. This move lets you pocket the net amount as savings so you can live more comfortably during your retirement. 

Downsizing also gives you less empty living space, lower utility bills and fewer maintenance responsibilities to worry about. The same downsizing strategy applies to your big family car that you can trade in for a smaller and less expensive vehicle that operates more economically.

If you already have retirement funds stashed away, then you can start working with a financial planner who can help you better invest the money you already put aside. This strategy is especially helpful once you have reached retirement age and want some help putting your investment funds to their best use. 

If you think you have gotten behind on your retirement savings plan and just want to put some money aside quickly for that purpose, you can focus on the various “set it and forget it” investment schemes. These programs tend to be easier to manage when you have relatively little time to focus on exactly what investments to select. 

Mutual funds with a strong track record can also offer a useful investment option when you have little time since you can just purchase them and let their managers do all the investment selection work. Vanguard, Northern Trust, Pimco and Baird all offer suitable mutual funds for this purpose. 

Who Should Save for Retirement?

The short answer is that everyone should save for retirement. Still, even if you have a pension from your job and other retirement plans, avoid assuming that those funds will be there when you actually retire since you just never know what will happen.

Also avoid counting on parents or grandparents to leave you a lot of money when they die. Money can be spent, wills can be changed and what you think is your inheritance can be legally transferred to other people, non-profit organizations or even beloved pets. 

Basically, you really want to start saving and preparing for your retirement even if you think you will probably be left in good shape by your family’s elders when they pass on. 

Best Retirement Advisors

To make the challenge of finding the best retirement investment solution easier for you, Benzinga has compiled a list of the top companies in the field that provide such services. 

Try Charles Schwab

Like most of its peers, Schwab charges $0 commission for online stocks and ETF trading and requires no account or trade minimum. There are also no hidden fees. However, there are charges for trading options contracts. Plus, there’s a broad array of multiple asset types are available on the platform. These include stocks, ETFs, mutual funds, bonds, options, futures, IRAs, custodial accounts and trusts. 

Whether you're a newbie or a seasoned pro, Charles Schwab's stock has you covered. With the app, you can get real-time quotes, place trades, create a watchlist and view your positions and balances. You can also view market indices, breaking news and in-depth charts. The Schwab Assistant, one of the app's top-shelf features, allows you to place trades, get quotes, set alerts and receive clarifications on investment questions.

Equity research reports are available from major providers like Argus and Credit Suisse. You can access daily market reports from Morningstar Morning Notes and Market Edge Daily Commentary. Schwab offers Screener on its web-based platforms, which is highly adapted for mobile views. The Schwab basic account requires zero minimum and is ideal for beginners. For passive investors, Schwab Intelligent Portfolios offers one of the best robo-advisors.

Charles Schwab also offers customer service via 24/7 live chat and phone support. You can also visit one of its over 300 offices for phone support. Phone inquiries are resolved within a minute and chat almost immediately. All these items come together to help you save for retirement or mange your retirement accounts, depending on your unique financial situation.

Should You Start Saving for Retirement Now?

Once you reach adulthood, it really is never too early to start thinking about your retirement savings plan. Prudent and early retirement planning can make your golden years far more comfortable and enjoyable once you decide to stop working.

If you found this article informative, please make sure to return to Benzinga often for more financial information about retirement, investing and other financial matters important to you. 

Frequently Asked Questions


Is 30 too old to start saving for retirement?


You should start thinking about retirement once you reach adulthood, and while 30 might be a bit late to start retirement planning, it is far better to start late than never. 


What is the best way to start saving for retirement?


The best way to save for retirement will probably depend on your particular situation, although many people planning for their retirement use 401(k) plans and IRAs plans to manage their investments for their post-work years due to their tax advantages. Purchasing suitable mutual funds is an easy way to get started saving for retirement if you don’t have the knowledge or want to spend the time picking suitable long-term investments yourself.