How to Save for Retirement Even if You’re Broke and in Your 20s

It’s never too early to start saving for the future.

Invest your money.

Stop buying coffee and avocado toast.

Young workers are likely to hear at least one of these pearls from family members, personal finance gurus, random motivational social media accounts, etc. But as any low-income 20-something can attest, what these admonitions fail to acknowledge is that many workers literally can’t afford to scrape together two cents, let alone put money from each paycheck into a 401(k).

That reality is especially real right now, and not just for young people. Research shows that most Americans live paycheck to paycheck due to historical inflation. Even among those earning between $100,000 and $150,000, 29% reported the same, according to a 2022 LendingClub report. (For context, the median U.S. household income was $71,186 for the same year.)

The data also says that the younger you are, the less you’re likely to earn: A Capital One survey found that the average salary for 20-24 year olds in the United States is just $35,586. Throw in student debt, rising housing costs and other everyday expenses, and you’ll find that young people are barely getting by.

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What they told you about

Why does the financial advice industry often save money a matter of personal choice and discipline? According to Tori Dunlap, founder of career and finance platform HerFirst100k, that’s probably because emphasizing individual responsibility is much easier than having an honest conversation about how wage discrimination and wealth inequality limit young people’s ability to save.

“Don’t even get me started on how ridiculous this industry is sometimes. There’s a lot of shame about money, period,” Dunlap told Money. “Not only is that shame unhelpful, it doesn’t help us make progress toward our goals.”

The other reason, he said, is that there is no one-size-fits-all advice when it comes to personal finance, but admitting that would spell doom for those who present themselves as all-knowing sages. It takes forces like policy change and a strong safety net of public benefits to create a society where everyone has the ability to save for the future.

Your personal finances are yours alone

You may already be on your retirement savings journey, but if you’re not, you can give yourself permission to not panic every time you read about the supposed doom that awaits you if you don’t have a Roth IRA. (You can also stop listening to celebrity TikToks talking about how easy it is to get rich investing.)

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“Personal finance is just that: personal,” Dunlap said. “I hate reading those articles where people say, ‘You can figure out how to cut costs.’ People who live paycheck to paycheck don’t have a Netflix subscription. They don’t go out to eat all the time.”

Whether you’re already contributing to retirement accounts or have a handful of change left at the end of the month, a first step you can take is to seek financial education that fits your individual circumstances, Dunlap said.

No one but you can tell you which financial options are right for you. There is unlimited information at our fingertips, as well as forums and communities like HerFirst100k to empower you and answer your questions. Just know that in finance, one size does not fit all.

“Look for money advice that connects with you and doesn’t make you feel like crap,” Dunlap joked.

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Your future self

For those who really can’t save, break down your monthly expenses and create financial priorities that benefit your quality of life to give you a better idea of ​​your overall financial well-being. That might mean putting $100 toward paying down debt instead of retirement funds, or spending your last $20 on a gym membership and saving nothing when it comes to your physical health.

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Regardless, Dunlap advises, set goals and create healthy habits, even if you only save a small amount per month. If you have to redirect that small amount to pay bills, so be it. What’s important is that you’re thinking ahead and starting with goals you’ll be able to achieve as your income increases with age.

If you have enough to save each paycheck, Dunlap recommends these specific ways to maximize your money: Set up automatic transfers (for credit card payments or regular contributions to a retirement savings account) to make your new choices finances are a breeze.

Most importantly, says Dunlaps, give yourself grace, tune out the noise, and focus your energy on figuring out what’s right for you.