Young Couples Eye Early Retirement
Many Americans think they should start saving for retirement in their late 20s. However, financial advisors suggest starting even earlier, especially for those hoping to retire young.
According to a recent report from Empower, a survey of 1,001 adults revealed that people believe they should kick off their savings at age 27, with aspirations to retire by 58.
Interestingly, these “ideal targets” differ from previous reports. A separate study by the Transamerica Institute shows that Generation X and baby boomers typically began their retirement savings at ages 30 and 35, respectively. Meanwhile, Generation Z and Millennials have been proactive, starting to save at around 20 and 25.
The average desired retirement age from the Empower survey is also considerably younger than what statistics suggest. As of 2024, men are retiring at around 64 and women at about 62, according to Boston College’s Retirement Research Center.
“Doable” but Better Before
Aiming for retirement savings in your late 20s is ambitious. Still, it’s quite doable, says Gloria Garcia Cisneros, a certified financial planner. She emphasizes that starting at this age gives your money a decent amount of time to grow.
However, if you delay your start, she advises being more aggressive with your savings.
About 40% of respondents in a recent survey feel they’re behind on retirement savings. Many identified financial struggles, such as debt or insufficient income, that contribute to their late start.
Interestingly, nearly half of those surveyed expressed a desire to have started saving earlier. Another report from Charles Schwab noted that while women often begin investing at approximately 31, a significant majority wished they had started much sooner.
Experts consistently recommend starting as early as possible for a more secure financial future.
You Can Start Early
Experts highlight that compound interest can significantly boost your savings. Compound interest involves calculating interest on the principal amount along with any accumulated interest over time, which is common for many savings accounts and investments.
Moreover, the power of time is critical. For instance, if a person saves $100 a month starting at age 22, with a 6% monthly compound interest, they could accumulate over $242,000 by retirement at age 65.
On the flip side, someone who waits until age 27 to start saving the same amount might only amass around $174,000 by the same retirement age.
