When you’re in your 20s, you do not spend much time thinking about retirement. Although it doesn’t need to be priority #1, spending some time planning for retirement now will save you major headaches in the future. According to the U.S. Department of Labor, a woman who retires at 65 can expect to live another 20 years, 2 years longer than a man. Having personal savings for retirement makes a substantial difference in your quality of life and ability to meet the cost of healthcare.

How much you need to save right now depends on your age, the lifestyle you want, and how many trips you plan on taking when retired. In your 20s, save whatever you can afford to, but aim for 10-15% percent of your income. When approaching retirement age, you’ll need to save at a higher rate – check out this calculator to help determine an appropriate goal.
Women are also more likely than men to work part-time jobs that don’t offer retirement plans and to interrupt their work life to take care of family, which means they have less money and time to save for retirement. This is a somewhat alarming, but don’t stress. There are steps you can take to prepare.
The best thing to do is start saving now! If your employer offers a 401(k) plan, take advantage of it. The 401(k) works through payroll deduction; you decide what percentage of your income you want to contribute.
Many companies that offer 401(k) plans will also match a certain percentage of your contribution. My employer matches up to 4% of mine. Although I currently only contribute 4% of my money, my account receives the equivalent of 8% of my income.

The more you contribute to a 401(k) the better. Next year, I plan to increase my contribution from 4% to 10%. With the company contribution, that’s 14%.
The money you contribute to your 401(k) is invested on your behalf through a plan administrator like a mutual fund or brokerage firm. It is a good practice to meet with that company and discuss how your money is invested. Making smart investments and steady contributions over time will help grow your retirement fund, and the earlier you begin, the longer it can grow.
If your employer doesn’t offer 401(k) plans, don’t worry, you can use an IRA instead. An IRA is a savings account made through a financial institution that allows you to save for retirement with account specific tax benefits. There are three types – Traditional, Roth, and Rollover – but we are focusing on the first two.
The Traditional IRA is tax-deferred, which means you only pay taxes when you withdraw the money. However, there is a contribution limit of $5,500 per year if you are under 50. This means you should stay at or slightly below a monthly contribution of $480.00, which is a reasonable goal.
Contributions to a Roth IRA are made from money you’ve already paid taxes on, so withdrawals are not taxed. There are income limits to who can contribute to a Roth IRA – $133,000 if you’re single and $196,000 if you’re married.
Like a 401(k), an IRA uses investments to grow your money. You do have the option to work with your financial institution and decide how your money is invested. IRAs can also be used to complement a 401(k).
Whatever account you choose to begin or enhance your retirement savings, the sooner you can start contributing to it the better. Your retirement will be less stressful if you give your savings time to grow, so start planning now. You might have to give up a few luxuries for the moment, but you will be able to afford and enjoy them in retirement.