Retirement Planning: How to Start Saving and Investing for Retirement in 2024

Editorial Note:

Updated: January 15, 2023.

Can you think of one thing that many people know they should be doing—but they haven’t started it yet?

If you guessed retirement planning, you guessed correctly! The truth is, saving money for retirement sounds like great advice on paper (or in an online article), but people assume it’s not convenient or easy enough to do in real life.

A 2021 report by the Federal Reserve backs this up: the data showed that a quarter of non-retired American adults hadn’t saved a penny in retirement savings yet. Other data tells us that only 36% of working Americans feel they know how to save for retirement.  

Which group are you in?

Everyone should be comfortable with knowing how to invest for retirement. And here’s a secret—saving for your retirement shouldn’t be hard! 

Today, you’ll learn what retirement planning includes and the 3 best steps you can take to stay on track.

Step 1: Knowing How Best To Save for Retirement Also Means Knowing When

When should you start saving for retirement? 

It’s not a trick question, and the answer is simple. Saving money for retirement can start whenever you can make it happen, and the best time is right now.

Investing for retirement doesn’t have to mean learning something complicated. It’s more about starting a good habit. Let us explain:

  • When you start working in any capacity (part-time, full time, in a workplace, or remote), try to set aside just a small amount of money every month. 
  • You don’t need to keep count. Instead, just start putting some cash away in a savings account that earns interest or in an investment account.

Following those easy steps, you’ll be on your way to building a healthy nest egg, and it doesn’t have to be a hardship on your finances or your life.

The sooner you begin saving money for retirement, the better off you’ll be. Starting as early as you can means your retirement savings get more time to grow. 

Each year that you let your savings grow, it turns into gains. So this year’s gains generate more savings—more gains—in the next year. It’s a wealth-building formula known as compounding.

Compounding works by a process called compound interest. The process happens when a sum of money becomes more and more significant because the interest you’re making on it keeps building more wealth over time. 

When you understand how compounding interest builds wealth on its own, it becomes that much simpler to learn how to invest for retirement. 

Check out this handy compound interest calculator. It’s fun to practice and see where your savings can take you. You can even try investing scenarios out and see what kind of return you’d get…it’s exciting to see! 

How To Save for Retirement When You’re Young

Check out these realistic scenarios of how to invest in retirement when you’re young (or why you should start your retirement planning as early as possible). 

These scenarios involve two different investors in a side-by-side comparison. There’s no magic formula in how they saved, but they each set aside a bit of cash each month for their retirement, and one investor started younger.


Investor A Investor B
  • Starts investing $100 a month at age 25
  • By age 65, their retirement balance is more than $640,000*

*based on their money growing at annual returns of 10% in compounding interest

  • Waited until age 35 to begin retirement savings account, but invested more: $200 a month
  • By age 65, their retirement balance is almost $200,000 less than Investor A, even though they contributed nearly $25,000 more to their retirement savings


The big difference between Investor A and B isn’t the amount of money. The difference is the power of time and compounding interest. Starting just ten years earlier dramatically impacts the returns you can potentially earn on your investments. 

So, is Investor B the loser here? Of course not! Investor B proves that you can achieve significant retirement savings even if you start a bit later in life. Investor B only saved $72,000 of their own money beginning at age 35. However, their investment returns grew to almost $380,000, and that’s not a shabby amount.

What if It’s Too Late?

Don’t think that way because it’s never too late! 

While saving money for retirement is a great goal to reach in your 20s and 30s, there are other ways to save when you’re older. Maybe you haven’t considered too much about retirement until now. Make a start! Every little bit you start saving now can grow into more investment returns with time.

Step 2: Figuring Out How Much You Need in Retirement Savings

Financial experts generally recommend that people should save 10% to 15% of their annual income (pretax) for retirement, but it can depend on your wage. If you earn a lot, you should aim for 15%. Lower-income earners can be at 10% because Social Security should provide them some post-retirement income.

When you’re figuring out how much you’ll need to retire, you need to consider these things:

  • Life expectancy (you don’t know for sure, but “guesstimate”)
  • How much do you currently spend and save
  • How do you want to live in retirement 

Here are ways to help you figure everything out:

  1. Estimate future income needs

It’s easier to estimate how much you’ll need in retirement if you already have a monthly budget.

If you can do a monthly budget on a computer spreadsheet, that’s great. However, if that’s unavailable to you, take a couple of sheets of paper and write down your monthly expenses. 

  • Some expenses you have right now won’t be there when you retire: child care, car payments, and your mortgage (hopefully). 

After recording your monthly expenses on computer or paper, also record what you think you’ll need in retirement. It isn’t hard! Consider these things: 

  • Monthly retirement expenses include food, clothes, housing, and transportation. It’s also a good idea to include travel, hobbies, sports like golf or tennis, anything you may want to spend money on later in life. 

Add up your estimated monthly retirement expenses and multiply it by 12 (for months). It’s a good guess of how much you’ll need per month in retirement. 

It’s also a good idea to compare your estimated monthly retirement savings with your current monthly take-home pay. Again, you’ll get a good idea of how much you need to save for retirement.

  1. Check out these estimates

Financial experts say, on average, a person needs 80% of their pre-retirement income to enjoy their current lifestyle after they’ve retired. Here’s an example:

  • If you earn $100,000 annually now, your annual retirement income should be $80,000 (in today’s dollars). 
  • This percentage is just an estimate. Some people think 70% is enough. Others are more conservative and aim for 90%.

There are other ways to make sure your “guesstimates” are on track. Our next point is something that you can use to help you.

  1. A retirement calculator

This retirement calculator can help you figure out three crucial numbers:

  • The starting balance you need in your retirement savings account
  • The amount you’ll need to contribute annually to retire
  • What your annual income will be after retirement 

The calculator is very user-friendly. You can adjust the numbers to get different results, and all of the numbers get stored in chart and table form for your reference.

  1. Keep an eye on your retirement planning 

You can plan for retirement now, but life can always throw us a curveball. Your job might change or go away, you might have a baby, or you’ll take the plunge and travel the world! 

Your best bet in planning for retirement is to keep performing retirement calculations when your circumstances change. You’ll do better by making adjustments as life changes, and it’s easier than playing catch-up later.

Step 3: Make Your Retirement Financial Goals a Priority

Retirement seems far away when you’re busy paying down debts like a credit card or student loan, and some people think it’s more important to build an emergency fund than save for retirement. 

The reality is, building an emergency fund and saving for retirement can go hand-in-hand,  especially if your employer matches your contributions through a company retirement plan.


The best retirement planning for you depends on how soon you can start. There are many ways you can save and invest, and if the markets decline and your retirement savings take a dip, that’s okay. But, unfortunately, it’s a regular occurrence in the investment world.  

As you get into the habit of saving money for retirement, you can begin to learn about ways to invest and build future wealth. Still, the best thing you can do right now is just to save money every month.

But when you also learn how to invest for retirement by placing your money in the right investments, and you’re patient as your money matures, it will only make your financial future more secure!

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