Retirement Planning for People in Their 20s and Early 30s


It is often hard for someone in his or her 20s or early 30s to see an urgent need to set aside any money for retirement. During this time of life, there are many pressing financial needs, and retirement planning is often low on the list. However, here are a few things every young investor should consider:

  • Planning for your future starts now. If you are just beginning to establish your career, your goal should be to work toward saving at least 15% of your salary, between both employee and employer contributions, for long-term retirement investing. Depending on your specific circumstances, you may need to contribute more. Additionally, it's best to contribute a percentage of your income to your retirement savings, rather than a set dollar amount. As your income rises, your contribution amount will automatically increase since it was set up as a savings percentage.


  • Right now, time is on your side. The time value of money is an amazing mathematical principle. Assuming a 6% average return, a 25-year-old investor would need to invest $250 per month to have $500,000 at age 65. If he or she waited until age 35 to begin investing, he or she would need to invest $500 per month to reach that same $500,000 goal at age 65. The younger you start, the more the compounding effect of money over time works in your favor.


  • Take advantage of your employer's retirement plan. Most employers offer a retirement plan for their employees. Just ask your employer to redirect a portion of your pay to the retirement plan they offer. It’s also important to know whether or not your employer also matches contribution dollars. Employers will often provide a certain percentage or dollar amount to your retirement account based on what you contribute. Matching dollars are a free boost not only to your account balance but also to your earnings potential. Think of the matching benefit as a way to achieve your goals faster, no matter where you are in your career. If you are not offered a match, base your contributions on a set percentage and make sure to know where you stand. Many experienced financial professionals suggest working toward a 15% salary contribution. GuideStone® offers many calculators and planning tools, such as our Retirement Planner Calculator.


  • Educate yourself about investing. You don't have to be a financial genius to make wise decisions about your investments. However, everyone needs a basic knowledge of financial matters. Plan to attend financial seminars hosted by your employer or your church. Go to the library and pick up several books on investing or financial planning. Learn about the difference between stocks and bonds, how mutual funds work and what would be an appropriate asset allocation for a young investor.


If you have any questions regarding retirement planning, please contact us at 1-888-98-GUIDE (1-888-984-8433).