How to Save for Retirement in Your 20s

Want to know how to save for retirement in your 20s? The ultimate financial question people have is how to save for retirement. The reason this is asked is because people want to ensure that when they are older, married and about to leave their job that they have money to play around with. Being retired should mean being able to live a life of enjoyment and relaxation. However, if that is what you want, you've got to start saving for retirement immediately. Saving for retirement in your 20s is a smart move because you don't have very many expenditures. The average age that a man gets married in the United States is 27. Therefore, for five years after graduating college, you're not married. That's money that you don't have to spend on a wife or children. These are prime years that you can spend saving for retirement, even if your paycheck isn't all that great. Here are a few things to do to save for retirement:

  1. Take advantage of the 401k that your company offers. Allow the maximum amount of money to be taken out of your pay check each pay cycle to go into the 401k. The sooner that it begins to grow, the more it'll have when you retire.
  2. With other money, put the maximum amount each year into an IRA. The type is up to you—traditional or Roth—but put it in an IRA. These are long-term retirement funds that could result in a lot of money come retirement.
  3. Stay away from variable annuities. These are funds that result in a considerable amount of money being taxed. While you walk away with some retirement money, in the long run that money could have been invested in other ways more effectively.
  4. Invest throughout your 20s. With your 401k and IRA all set up, use other money to invest in stocks, bonds and real estate. It won't be retirement savings per se, but more money when you're younger means more money when you're older, if you're wise with it.

The ultimate thing to consider is that you want your money to make money for you so, when retirement comes, you can retire comfortably. It's always been suggested that putting money in a savings account is good, but that's more for emergencies. The interest rate on a savings account is not enough to really retire with. That's why you should put money into a 401k and an IRA so that they can grow exponentially. That's where your retirement life will come from.

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