When to Start Saving for Retirement: 5 Factors to Consider

Retirement savings can be a tricky financial necessity to master. How much should you contribute, how often and how early? When it comes to selecting the ideal time to start putting money away, there are several factors involved.

Here are five things to keep in mind when starting your retirement planning.

1. Your desired retirement age

Everyone’s goal is a little different—yours might be “as early as possible.” But if you’re pressed for a realistic answer to the question, “At what age would you like to retire?” do you have something in mind? If you’d like to have enough funds to live in the way to which you’ve been accustomed by, say, age 62, it might benefit you (and your take-home pay) to start saving earlier so you don’t need to back-load your contributions in your 40s and 50s.

Even if your paycheck doesn’t seem large enough to spare a regular retirement contribution in your 20s, most advisors recommend starting in some capacity—even a small allotment—by age 25.

2. Your retirement plans

What about your intentions once you hit your target retirement age? Do you anticipate traveling internationally or investing in home enhancements? If you think that you’ll be spending more on incidentals and luxury items in your retirement than you do currently, factor this into how much you contribute and how early you start doing so.

Consider doing a budgeting worksheet—what’s your desired monthly retirement income? Work toward this as you crunch the numbers.

3. Your spousal situation

Your ability to fund your retirement will also depend largely on a significant other—do you have a spouse, and when might he or she retire comfortably? If you’ve begun saving before you marry or you’re embarking on the retirement-savings journey for the first time alongside your spouse, operate in conjunction. Diversify your portfolios and the styles of accounts you contribute to, and start saving at a point when it will be most likely that you’ll be able to retire around the same time.

Not everyone’s career or job benefits are alike—account for these differences between you and your spouse. After all, those retirement travel plans will be much more fun together!

4. Your career prospects

If you have the salary flexibility and the budgeting prowess, you might even start saving for retirement the first time you start receiving a regular paycheck. But your future career plans can play a role in how early (and how much) you contribute. If you hit a particularly prosperous job stretch, consider increasing your contributions. If you’re at the bottom of the career ladder and anticipate climbing in years to come, let your contribution levels reflect this growth.

You can’t always predict where you career will take you—but take advantage of times when you have the luxury of contributing more (or less).

5. Your saving options

Beginning your retirement savings early can come with many benefits—particularly if you begin before you have dependents or even a great deal of assets you’re responsible for (i.e., house, cars, etc.). Many financial advisors will recommend that you take advantage of your younger years by selecting savings options that are more aggressive—higher risk, higher reward—as they will have much longer to rebound from any market dips than when you’re in your 40s or 50s.

It can be trial and error—from market-bound 401Ks to safer and more predictable IRAs, the timing of when you contribute more or less to certain types of accounts can often depend on your age and your salary comfort.