--- title: How to Start Saving for Retirement in Your 20s and 30s description: Learn how to start saving for retirement early. Compare IRAs and 401(k)s, make the most of employer matches, and see how a small start today adds up big. image: https://rmcu.net/hubfs/AdobeStock_1024661003.jpg --- [![RMCULogoColor.jpg](https://rmcu.net/hubfs/RMCU-logo.svg "RMCULogoColor.jpg")](https://rmcu.net) [Online Banking Login](https://banking.rmcu.net/auth/signin) [Online Banking Login](https://banking.rmcu.net/auth/signin) [![RMCULogoColor.jpg](https://rmcu.net/hubfs/RMCU-logo.svg "RMCULogoColor.jpg")](https://rmcu.net) - - [Home Loans](https://rmcu.net/home-loans) - [Personal](https://rmcu.net/personal) - [Business](https://rmcu.net/business) - [Membership](https://rmcu.net/membership) - [Careers](https://rmcu.net/membership/about-rmcu/careers) - [Contact Us](https://rmcu.net/contact-us) - Search - [Financial Education ▾](https://rmcu.net/blog/how-start-saving-retirement#financial-education-nav) - [About RMCU ▾](https://rmcu.net/blog/how-start-saving-retirement#about-rmcu-nav) - [Security](https://rmcu.net/membership/security) - [TruStage: Security Alert](https://rmcu.net/trustage-security-alert) - [Money Mastermind](https://rmcu.net/money-mastermind-lessons) - [Financial Counseling](https://rmcu.net/financial-counseling) - [Savvy Money](https://rmcu.net/membership/financial-education/savvy-money) - [Blog](https://rmcu.net/blog) - [Resources](https://rmcu.net/resources) - [RMCU Team](https://rmcu.net/membership/about-rmcu/rmcu-team) - [Member Information](https://rmcu.net/membership/about-rmcu/member-information) - [Annual Meeting](https://rmcu.net/membership/about-rmcu/annual-meeting) - [Community](https://rmcu.net/membership/about-rmcu/community) - [Our History](https://rmcu.net/membership/about-rmcu/history) [back to blog](https://rmcu.net/blog) [Financial Literacy](https://rmcu.net/blog/topic/financial-literacy) # How to Start Saving for Retirement in Your 20s and 30s Read Time **8 mins** | Written by: Kelly Fleiner [mailto:?subject=How%20to%20Start%20Saving%20for%20Retirement%20in%20Your%2020s%20and%2030s&body=https%3A%2F%2Frmcu.net%2Fblog%2Fhow-start-saving-retirement](mailto:?subject=How%20to%20Start%20Saving%20for%20Retirement%20in%20Your%2020s%20and%2030s&body=https%3A%2F%2Frmcu.net%2Fblog%2Fhow-start-saving-retirement)   ### **Key Takeaways** - The single biggest advantage you have in your 20s and 30s is time, which lets compound growth do most of the heavy lifting for you. - A **401(k)** comes through an employer and often includes a match, while an **IRA** is something you open yourself, including [through RMCU](https://rmcu.net/personal/savings#hsa-ira-accounts). - If your employer offers a 401(k) match, contribute at least enough to get the full match. Passing it up means leaving part of your paycheck behind. - You don't need a lot of money to start saving for retirement. Even small, automatic contributions add up over decades. - Not sure where to begin? RMCU members can sit down with a[certified financial counselor](https://rmcu.net/financial-counseling) and start planning. Retirement can feel like a problem for "future you" when you're in your 20s or early 30s. Between rent, student loans, a car payment, and finally earning a real paycheck, setting money aside for something 40 years away is a hard sell. If that sounds familiar, you're in good company. Most people wait longer than they wish they had. When it comes to saving for retirement, starting sooner matters far more than starting big. The years you have right now are an advantage you can never buy back later. **The first step can be as simple as opening a retirement account,** [something you can start online with RMCU in just a few minutes.](https://rmcu.net/personal/savings#hsa-ira-accounts) ## **Why Your 20s and 30s Are the Best Time to Start Saving** The reason early beats big comes down to compound growth. When your savings earn returns, those returns start earning returns of their own, and that snowball builds momentum over time. Consider two savers, both planning to retire at 65. - Taylor starts at 25 and invests $200 a month, about $46 a week. - Jordan waits until 35 and, trying to make up for lost time, invests $300 a month. Assuming both have their money invested for growth and earn a hypothetical 7% average annual return (roughly what a diversified, market-based retirement account historically averages over the long haul), Taylor retires with about **$525,000** while Jordan lands near **$366,000**. Taylor comes out nearly $159,000 ahead, and did it while contributing $12,000 *less* over a lifetime. The only real difference was that extra decade of growth. That's the quiet power of time, and it's the one thing you have more of right now than you ever will again. **Here's the caveat:** How much it grows depends on *where* you put it. Market-based accounts, like the investment funds inside most 401(k)s, rise and fall from year to year in exchange for higher long-term growth potential. A savings-based option, such as an [RMCU IRA savings account](https://rmcu.net/personal/savings), works differently. It's a safe, steady, guaranteed place to build retirement savings, which makes it a solid foundation for the more conservative part of your plan. Many people use a mix of both, and finding the right balance for you is a great question to bring to a [financial counselor](https://rmcu.net/financial-counseling). ## **401(k) vs. IRA: What's the Difference?** The two retirement accounts you'll hear about most are the [401(k) and the IRA](https://rmcu.net/blog/ira-vs.-401k-whats-the-difference). They're both built for retirement, but they work a little differently. A **401(k)** is offered through your employer. Contributions come straight out of your paycheck, often before taxes, and many employers add matching money on top. An **IRA** (individual retirement account) is one you open on your own, with no employer required.[RMCU offers IRAs](https://rmcu.net/personal/savings) in Traditional, Roth, SEP, and ESA varieties, so you can pick the tax treatment that fits your situation. | | 401(k) | IRA | | --- | --- | --- | | How you get it | Through an employer | Open it yourself | | 2026 contribution limit | Up to $24,500/year | Up to $7,500/year | | Employer match | Often available | Not available | | Account types | Traditional, Roth | Traditional, Roth, SEP, ESA | | Best for | Anyone with a workplace plan, especially one with a match | Anyone, with or without a workplace plan | *Contribution limits per the*[*IRS 2026 announcement*](https://www.irs.gov/newsroom/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500)*.* The good news is you don't have to choose just one. Many people contribute to a 401(k) up to their employer's match, then open an IRA for additional savings and more flexibility. If you're early in your career and expect to earn more later, a Roth IRA is often a smart fit, since you pay taxes on the money now while your rate is lower and withdraw it tax-free in retirement. We dig into that in our[Why You Need a Roth IRA](https://rmcu.net/blog/why-you-need-roth-ira-rmcu) blog, which is worth a read! ## **How to Take Advantage of an Employer Match** If your employer offers a 401(k) match, this is the closest thing to free money you'll find. A match means your employer contributes to your retirement account based on what you put in. A common setup is a dollar-for-dollar match up to a certain percentage of your pay, say 4%. If you contribute 4%, your employer adds another 4%, effectively doubling that portion of your savings before it even starts to grow. Here's the trap to avoid: if possible, don’t contribute less than the full match. If your employer matches up to 4% and you only put in 2%, you're leaving the other 2% on the table. That's part of your compensation you simply don't collect. So a practical rule of thumb for anyone with a workplace plan is to contribute at least enough to earn the entire match, then decide where any additional savings should go from there. ## **How to Start Saving for Retirement When Money Is Tight** Starting a retirement fund on an entry-level income sounds intimidating, but it's more doable than most people expect. A few things that help: ### **Start Small, and Start Now** You don't need a big number to begin. If money's tight, even 1% of your paycheck gets the habit going. A comfortable starting range for a lot of people is 3% to 5%. On a $40,000 salary, 5% works out to about $167 a month, or roughly $77 per biweekly paycheck. ### **Increase It Gradually** Every time your pay goes up, send a slice of the raise to retirement before it works its way into your everyday spending. Going from 3% to 4% on a $40,000 salary is only about $33 more a month, but over a full career, that single percentage point can grow into tens of thousands of dollars. Many 401(k) plans let you set automatic annual increases, so your contribution steps up on its own without you having to think about it. ### **Get the Match First** If your employer offers a 401(k) match, earning every dollar of it should generally be your first retirement priority. A dollar-for-dollar match instantly doubles the money you put in, an immediate return no market investment can promise you. The one exception worth weighing is [high-interest debt](https://rmcu.net/blog/how-to-use-a-credit-union-to-pay-off-debt), like a credit card balance, where paying it down can be its own guaranteed return. If you're staring down both at once,[here's how to think through debt versus retirement savings](https://rmcu.net/blog/should-you-pay-off-debt-or-save-for-retirement). ### **Open Your Own Account When You're Ready** No 401(k) at work? You can still save for retirement on your own with an IRA, and opening one at RMCU takes just a few minutes online. It's also a smart next step even if you do have a workplace plan: once you've locked in your full match, an IRA gives you more flexibility for additional savings, and for younger savers just starting out, a Roth version is often especially worth a look. ## **You Don't Have to Figure It Out Alone** Retirement planning comes with a lot of questions, and most of them are things nobody taught us in school. That's exactly what RMCU's member resources are for. You can schedule time with a[certified financial counselor](https://rmcu.net/financial-counseling), included as part of your membership, to talk through which accounts make sense for your goals and how much to set aside. Our counselors act as a judgment-free sounding board and an accountability partner as you go. Want to build your knowledge as you go? The [Money Mastermind course](https://rmcu.net/money-mastermind-lessons) answers the everyday financial questions that tend to come up in your 20s and 30s. Wherever you are on your path, the best time to start saving for retirement is now, and your credit union is here to help you take that first step. [mailto:kfleiner@rmcu.net](mailto:kfleiner@rmcu.net) ##### Kelly Fleiner Kelly Fleiner, CUBDP is the Vice President of Brand and Community Engagement at Rocky Mountain Credit Union, where she leads marketing, public relations, and community impact initiatives rooted in Montana values. A strategic storyteller and culture champion, Kelly blends data-driven insight with people-first leadership to strengthen brands, empower teams, and deepen community connections. She is passionate about elevating the credit union movement through bold ideas, meaningful partnerships, and authentic engagement. 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