My niece asked me last Thanksgiving how she should start saving for retirement. She’s 22, just landed her first real job, and had approximately zero context for what a 401k even was. I thought about the complicated answer I could give her — asset allocation, contribution limits, employer match mechanics — and then I thought about what actually would have helped me at 22. Here are the three things I told her.
Start Small, but Start Now
The math on compound growth is real and it’s genuinely remarkable. If you save $100 a month starting at 22, and earn a modest 7% annual return, you’ll have around $262,000 by age 65. Start the same contributions at 32 instead, and you end up with about $122,000. Same amount invested, roughly half the result — just because you waited a decade.
You don’t need to save a lot. You need to start. Even $25 or $50 a month from your first paycheck sets the habit and starts the clock on compounding. The number can grow as your income grows.
Set a goal first. Think about what retirement actually looks like for you — where you want to live, what you want to do, what kind of lifestyle you want to sustain. That picture helps you reverse-engineer a savings target, which makes the whole thing feel more concrete and less abstract.
Open the Right Account and Let It Work
If your employer offers a 401k with a match, start there — always contribute at least enough to capture the full match. That’s free money, and passing it up is one of the more common and costly financial mistakes I see people make in their 20s.
If your employer doesn’t have a match, or after you’ve maxed out the match, a Roth IRA is usually the next stop. Roth accounts are funded with after-tax dollars, but your money grows tax-free and you pay no taxes on qualified withdrawals in retirement. For someone in their 20s in a lower tax bracket, the Roth is often a better long-term deal than deferring taxes now.
Interest — or more precisely, investment returns — is what makes these accounts powerful. A savings account paying 0.5% annually and a diversified index fund averaging 7–8% over decades are playing completely different games. The account type matters. Put your retirement savings where the growth can actually happen.
Be Consistent — That’s the Real Strategy
Consistency is the part that sounds boring but actually does most of the work. I’ve talked to people who agonize over picking the perfect funds, reading market analysis, trying to time their contributions — and they’re missing the point. The single most important variable is whether you’re putting money in regularly.
A good rule of thumb is to save at least 10% of your take-home pay. If that sounds like a lot right now, start with 3% or 5% and increase by 1% every time you get a raise. You’ll barely notice each increment, and over a few years you’ll be at a meaningful contribution rate without it ever feeling like a sacrifice.
Set up automatic contributions so you don’t have to remember to do it. Have the money move to your retirement account before it has a chance to disappear into everyday spending. The habit builds the wealth — not the occasional big deposit or the perfect investment pick.
Those three things — starting early, choosing the right account, and staying consistent — aren’t complicated. But they’re what actually move the needle over the long haul. Everything else is details you can learn as you go.
