How to Save 50% of Your Income for Retirement

You may think you have years and years to go before you have to start thinking about retirement. Think again. Though the idea isn’t looming on your horizon just yet, it’s actually the best time to start planning. Give yourself a huge edge to being wealthy in your old age. Compare what you’d have after 40 years of savings as opposed to 20—more than double, giving interest rates. You’ll be able to retire sooner, and better. You don’t even have to make a lot to save. There’s plenty you can do making less than $40k per year. So stop procrastinating. Don’t pass up on any opportunities that come your way. Keep your eyes open for them and take them whenever you can—your future self will thank you.

1. Save Now

It doesn’t matter whether you’ve never saved, are bad at saving, or have no idea how to do it. Now is the time. Don’t let your expenses become an excuse. These are your prime years; even putting away a little now can pay off a lot later.

2. Get Help

Companies advertise 401k plans in their employment benefits packages for a reason. This is part of your compensation—take advantage of it. Sign up and start using it. And bonus points if your employer has a matching program. Let them double your money for you!

3. Go Roth

No company sponsored retirement plan? Sign up for the next best option, a Roth IRA. You fund this with money from your paycheck after tax, but when you withdraw the funds later, unlike a 401k, you won’t be taxed. Put as much as you can into that fund. Yes, even now. Do you really need that pair of designer jeans? You can also try the MyRA, from the U.S. Treasury, which promises that the savings bond will never decline in value. Bonus: there are no low-balance fees.

4. Invest

If investing is an option for you, do so. And do so shrewdly. Try to put a bit in stocks, not just safe bonds with a safe (and flat) return rate. Look for funds that are targeted for your age bracket to help guide you. And find a manager you trust!

5. Get Smart

An overwhelming number of people don’t have any actual financial literacy. Don’t be one of them. Take control of your future funds by making sure you understand how markets and investments and money work. If your company offers access to a financial advisor? Sit down with them ASAP.

6. Stay Out of Debt

Student loans and mortgages are a necessary evil. But try to keep debt from piling up on your credit cards. You’ll pay more than double the original amount for your purchases if you let the interest charges get the better of you.

7. Have a Stash

Make yourself a safety net so you never have to dip into the red. That way, if your car dies, you’re not saddled with a huge credit card bill that has the possibility of becoming a spiraling balance down the road.

8. Get Those Tax Breaks

Find out whether your tax bracket offers any breaks for contributing to a 401k or IRA. There’s also something called the “saver’s credit” for individuals beneath a certain income threshold. See if you qualify.