How Many Years Should You Actually Save for Retirement If You’re Under 40?

For those under 40, retirement may feel far off, but the earlier you start saving, the better. A longer timeline gives your money more time to grow through compound interest.

Find Out: I Help People Retire Every Day — Here’s the Most Common Retirement Mistake People Make

If you’re under 40, then, how many years should you actually save for retirement? Experts offered some key planning tips.

If you retire in your 60s you could realistically have another 30 years of life to fund, according to Kyle Chapman, licensed fiduciary and investment advisor representative at Asset Preservation Wealth & Tax.

If you don’t save enough while you have the time, this can lead to “needing to power save later in life which strains your budget in later years,” he said. Then you’re running to “catch-up” from all that missed compounding interest.

Learn More: 6 Key Signs You’ll Run Out of Retirement Funds Too Early

It’s better to think in terms of “retirement readiness” over number of years, according to Sean Babin, a CFP and CEO of Babin Wealth Management. “Your retirement readiness depends on factors like: the age you want to retire, the lifestyle you want to maintain, your investments performance and inflation expectations,” he said.

These inputs help determine how much you’ll need saved by your target retirement age.

If you start saving in your 20s, you’ll have 10 more years of compounding than the average person who saves for retirement, Chapman said. He broke down the stark numbers in an example: If you have $10,000 saved and you are saving $200 per month at a return of 8% per year, this gets you to over $171,000 in savings after 30 years. However, after 40 years, that’s over $404,000. “The more time compounding, the less you need to save.”

If you’re just getting started, check whether your employer offers a 401(k), Babin said, especially if it comes with employer matching funds. For 2025, you can contribute up to $23,500 if you’re under 50. “This is often the biggest savings vehicle for most Americans’ retirement. If a 401(k) isn’t available, you can still use IRAs, Roth IRAs and brokerage accounts to begin building your nest egg.”

Babin has been consistently surprised to see how many of his own generation — millennials — are underprepared for retirement. “Most are shocked when I explain that they’ll likely need $5 million to $7 million saved by age 65 to retire with confidence.”

Rising costs and inflation mean millennials will need significantly more to maintain the same lifestyle as their parents.

Retirement planning must include healthcare planning. Since people are living longer overall, expect to live longer than your parents or grandparents and factor in long-term care needs as these are becoming “more and more prevalent in the retirement planning,” Chapman said.

Inflation also plays a role in needing more retirement savings, Chapman pointed out.

“Average inflation rates are starting to tick upward which also leads to needing a larger allocation towards investments that hedge against inflation which tend to have more risk.” More risk means you need a larger nest egg to ride out volatility.

If someone under 40 hasn’t started saving yet, Chapman urged to at least start by contributing up to the 401(k) match with their employer.

“From there, they should open up a Roth IRA and individual TOD (transfer on death) account to start a regular monthly contribution to the accounts.”

“The best time to start saving was yesterday, the second-best time is today,” Babin said. The longer you wait, the more aggressively you’ll need to save. As a rule, he recommended aiming to set aside 12% to 15% of your gross income every year.

Start now, automate what you can and let time do the heavy lifting for your future self.

How Many Years Should You Actually Save for Retirement If You’re Under 40?

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