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What to do in your 20s, 30s, 40s and 50s to retire with enough money

Here are the best ways to save for retirement in all stages of life.
If you’re an empty nester, you might consider downsizing your home or cutting back on costs to save some extra cash.
If you’re an empty nester, you might consider downsizing your home or cutting back on costs to save some extra cash.TODAY Illustration / Getty Images

Retirement is the light at the end of the tunnel following years of hard work and a job well done. But that retirement money doesn’t just appear out of nowhere on your last day of work — each penny is saved up over the course of your career in anticipation for the big moment.

When you first get a job, retirement seems eons away and something that can easily be left on the back burner for a decade or two. However, your retirement fund is actually like a tree that you plant at a young age and tend to over the years, so that by the time you finally retire, there’s plenty of fruit to pick when you stop earning an income.

Retirement should be considered at all stages of life — even when you’re in your 20s. Let’s break down the best ways to save for retirement so you can retire comfortably at the end of your working life.

How to save in your 20s

When you start getting paychecks at the beginning of your career, the thought of spending it all is enticing. But, if you teach yourself the good habit of saving and investing money early, you could be preparing yourself for future financial freedom without even thinking about it.

  • Figure out your most important expenses. Make sure to take a good look at your take-home pay and square it with your real expenses, explained NBC News senior business correspondent, Stephanie Ruhle — think rent, food, utilities and other important costs in your day-to-day life that you need to survive.
  • Establish an emergency fund. Everyone should have a financial safety net just in case you’re faced with unexpected expenses or unemployment. If you add a few dollars from each paycheck to a savings account meant for emergencies, that money will add up and could save you from credit card debt or high-interest loans. “No one likes to bank on a personal crisis, but you should bank for one,” Ruhle said. Most advisors suggest that you make a goal of saving three to six months of living expenses for your emergency fund and keep adding to it over time.
  • Take some time to learn about 401(k) plans. According to Investopedia, a 401(k) allows workers to make contributions to their 401(k) accounts through automatic payroll withholding, and their employers can match some or all of those contributions. What if your employer doesn’t offer 401(k)s? Check and see if your employer offers a 403(b) plan. A 403(b) plan is a retirement plan for specific employees of public schools, tax-exempt organizations and certain ministers.
  • Educate yourself about your company’s benefits. Investing and retirement specialist at NerdWallet Tiffany Lam-Balfour said if your employer offers a 401(k) match, you should at least contribute enough to get your free money. “The earlier you start investing, the more you’ll benefit from compounding,” Lam-Balfour said. “Compounding makes your money work for you because the returns on your retirement investments are reinvested to earn even more returns.”
  • Make sure your money isn’t just sitting in an account. A lot of people make the mistake of not investing their money and just letting it standby in an account. If you’re feeling overwhelmed, you can explore target date index funds to make it a little easier.

How to save in your 30s and 40s

Often, when we reach this phase of life, the limited financial responsibilities of our twenties are long gone and replaced with the expenses of buying a home, starting a family or getting married. With all of these additional responsibilities taking center stage, retirement once again seems like it might be too far away to keep a close eye on — but there are ways to keep building those savings.

  • Track your spending.Tracking your money can help you budget just like tracking your food can help you optimize your diet,” Ruhle said. “You have to know where your money goes before you can cut, paste or put it away.” Be honest with yourself and track every dollar — your future self will thank you.
  • Take advantage of your peak earning years. Generally, you’re earning the most money at this stage of life. Try and put as much money as possible into your savings, even if you are paying for a house or family expenses.
  • Consider contributing to an IRA. While you continue to bump up retirement contributions to your workplace retirement plans, Lam-Balfour suggested you check out the benefits of IRAs. “The goal is to max out all retirement accounts, if possible. IRAs offer compelling tax advantages and using both traditional and Roth IRAs can offer tax and withdrawal flexibility in retirement.” An IRA is also a great option if your employer does not offer retirement benefits. This can be set up with most brokerages and some banks. You can choose the type of investments or ask a financial adviser to help you determine the best options for you.
  • Look into a health savings account or HSA. An HSA is a tax-advantaged account created for individuals who are covered under high-deductible health plans (HDHPs) to save for qualified medical expenses that are over and above an HDHP's coverage limits and/or exclusions. “Since healthcare spending increases as we get older, building up your HSA can be a savvy retirement move,” advised Lam-Balfour.

How to save in your 50s

When you make it to your fifties, retirement is within reach for some people. However, if you feel like you’re not where you’d like to be, don’t panic. There are plenty of ways to adjust your lifestyle to keep your retirement funds on track.

  • Get familiar with catch-up contributions. Did you know that for 2020 and 2021, those aged 50 or older can save an additional $6,500 in 401(k)s on top of the $19,500 max contribution and an additional $1,000 in IRAs on top of the $6,000 max contribution? “Remember, retirement is about not working, so you have to figure out how you are going to get by without anything coming in,” Ruhle said.
  • Reduce expenses and invest as much as possible. If you’re an empty nester, you might consider downsizing your home or cutting back on costs to save some extra cash. If you’re the owner of an additional property or space, you might consider renting it out or finding other passive income opportunities to take advantage of.
  • Make a detailed financial plan. Planning out exactly how you plan to spend your money during retirement is a great way to make you feel more prepared. Lam-Balfour noted that getting acquainted with a financial advisor or planner is a great resource to have during this period. They can double-check your plan, make sure your asset allocation is appropriate and offer guidance on any retirement questions you have.