How to Save for Retirement at Any Age

To determine how to save for retirement, consider how much you expect to spend in retirement.

If you’re in your 50s or older, you may be able to answer this question with relative ease and build a retirement savings goal around it. If you’re earlier in your career, you may be unable to come up with a precise number. Instead, plan to set aside a percentage of your gross income.

Worrying about retirement is common — 61% of adults 50 and older are concerned that they won’t have adequate funds in retirement, according to a January 2024 survey from AARP.

Regardless of your age, you can take steps to improve your retirement prospects and ease financial anxiety.

How much to save for retirement

The average 401(k) account balance in the third quarter of 2024 was $132,300, according to Fidelity. However, there’s no one-size-fits-all amount when it comes to retirement savings. Where you plan to live, how frugal you are and when you want to retire are just a few factors that can influence your savings plan.

“The amount of money that we need in retirement is directly related to how much we plan on spending,” says Dan Galli, a certified financial planner and principal at Daniel J. Galli & Associates in Norwell, Mass.

When you start your career, get into the habit of setting aside a percentage of your gross income — your total earnings before subtracting taxes and other deductions. At least 10% is a good rule of thumb in your 20s.

You can use an online retirement calculator to estimate how much retirement income you may need compared with how much you may have based on your savings. Companies such as Vanguard and Prudential provide this tool.

How to save for retirement: IRA or 401(k)?

An individual retirement account (IRA) is a retirement savings account you can open through a bank or other financial institution. In contrast, a 401(k) is a retirement savings account offered by many employers, allowing eligible employees to contribute a portion of each paycheck into the account.

Each type of account has two main varieties: traditional and Roth. If you save in a traditional IRA or 401(k), you make pretax contributions and typically won’t pay taxes on your contributions until you withdraw them. With a Roth account, you make post-tax contributions, meaning you pay taxes upfront and can withdraw earnings tax-free later.

“What’s right for one person may not be right for somebody else,” Galli says.

A Roth account is ideal if you expect to reach a higher tax bracket later, as you can avoid paying taxes when you withdraw after meeting specific requirements.

Traditional 401(k) plans have a more immediate tax advantage. Each dollar you contribute to a traditional 401(k) reduces your taxable income for that year. You can deduct contributions made to traditional IRAs up to your full contribution amount, depending on your filing status, income and whether you have a retirement plan available at work.

If you have access to an employer-sponsored 401(k) plan, start here rather than with an IRA. Once your 401(k) is set up, paycheck deductions will happen automatically, making saving easier.

Check whether your company offers an employer match because this can boost your savings power.

You can also contribute more to a 401(k) than an IRA each year. In 2024, your contribution to your 401(k) was capped at $23,000. For 2025, this limit increases to $23,500.

IRA contribution limits remain unchanged in 2025. The annual limit for an IRA is $7,000, or $8,000 if you are 50 or older, though you may have a lower maximum for a Roth IRA, depending on your income and tax filing status. Once you reach certain upper-income levels, you won’t be eligible for a Roth IRA.

How to save for retirement by age

Saving for retirement is important throughout your career, but your tactics should evolve as you age. Ultimately, your savings plan should fit your life stage.

How to save in your 20s

• Set aside at least 10% of your gross income. Consistently putting at least 10% of your gross income into a retirement account can help set you up for success.
• Think about a Roth account. In your 20s, you’re likely not in the highest tax bracket you’ll ever be in. As a result, choosing a Roth IRA over a traditional IRA can save you money on taxes in the long run, even though tax payments could be a burden in the short term.
• Focus on stocks. You can allocate a larger portion of your retirement investment portfolio to stocks if you plan to keep that money in the market for a long time. “Stay well diversified, like in a total stock market index fund or something like that, and ignore the news,” Galli says.
• Consider a health savings account (HSA). If you have a high-deductible health care plan in 2025, you can use an HSA to save up to $4,300 if your plan only covers you (or up to $8,550 if it covers your family). Those contributions are tax-free when you deposit or withdraw them as long as you use them for eligible medical expenses. Plus, you can save them for retirement.

How to save in your 30s

• Continue the good habits from your 20s. If you’ve been setting aside some income in retirement savings accounts or HSAs, keep it up. You’re still far enough from retirement and can remain focused on stocks.
• Increase your contributions as needed. Your savings goals will depend, in part, on how much you’ve saved so far. For example, if you didn’t save in your 20s, consider setting aside 15% of your gross income, including any employer contributions.
• Factor in other priorities. The median age of a first-time homebuyer in the United States was 38 between July 2023 and June 2024, according to the National Association of Realtors’ 2024 Profile of Home Buyers and Sellers. If you’re buying a house or budgeting for a child’s college savings, make sure retirement savings remain a priority.

How to save in your 40s

• Consider pretax contributions. When you’re at the highest earning point of your career — which can be the case for workers in their 40s — you may want to follow a savings strategy that defers paying taxes on your retirement contributions upfront. You’ll have to pay taxes on these funds when you withdraw them later, but you’ll likely be in a lower tax bracket by then.
• Avoid early withdrawals. You might be tempted to cash out a retirement account to help your child avoid student debt, for example. But you’ll usually owe an extra 10% tax on any funds you access before you’re 59½ years old.
• Review your debt. You don’t need to pay off all of your debt before retirement, but checking in on your debt load and prioritizing higher-interest balances — such as those on credit cards — can be a worthwhile part of your savings plan.

How to save in your 50s

• Identify savings gaps. Look into how much money you expect to receive from Social Security, and evaluate your other income sources. Compare your expected income with your expected retirement expenses to see if there’s a gap. You can also consult a financial advisor to make sure you have a solid plan.
• Avoid investing aggressively. Even if you feel behind on retirement savings when you reach your 50s, resist the temptation to invest aggressively. “That’s exactly the wrong thing to be doing because now you’re rolling the dice,” Galli says. “That’s when the stock market becomes like Las Vegas.” Instead, focus on increasing your savings.
• Make catch-up contributions if needed. If you will be 50 by the end of the calendar year, you can start making catch-up contributions. That could mean up to $7,500 in additional contributions to your 401(k) and up to $1,000 in additional IRA contributions.

How to save when you get to retirement age

The full retirement age for Social Security purposes is 67 if you were born in 1960 or after. However, reaching retirement age doesn’t necessarily mean you’ll be fully retired — about 27% of adults between the ages of 65 and 74 were still in the labor force as of 2023, according to the Bureau of Labor Statistics.

If you continue to work, you may be able to keep saving to close any gap between your retirement needs and your available retirement funds.

When you leave the labor force, you can ideally shift your focus from saving to managing your retirement portfolio. Your approach then will depend on factors such as how much you have saved and your risk appetite for investing your assets.