How to Save for Retirement Even if You’re Broke and in Your 20s

It’s never too early to start saving for the future.

Invest your money.

Stop buying coffee and avocado toast.

Working youth have probably heard at least one of these pearls from relatives, personal finance gurus, random motivational social media accounts and so on. But as any low-income 20-something can attest, what these admonitions fail to acknowledge is that many workers literally can’t afford to rub two nickels together, let alone put the money from each paycheck into a 401 ( k).

That reality is especially real right now, and not just for young people. Research shows that the majority of Americans live paycheck to paycheck due to historical inflation. Even among those earning between $100,000 and $150,000, 29% reported the same, according to a 2022 LendingClub report. (For context, the median US household income was an estimated $71,186 for the same year.)

The data also says that the younger you are, the less you’re likely to earn: A survey by Capital One found that the median salary for 20-24-year-olds in the United States is just $35,586 . Pile on student debt, rising housing costs and various other everyday expenses, and you’ll find that young people are barely making ends meet.

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About what they told you

Why does the financial advice industry so often discount money as a matter of personal choice and discipline? According to Tori Dunlap, founder of finance and career platform HerFirst100k, it’s probably because focusing on individual responsibility is much easier than having an honest conversation about how wage discrimination and the – wealth inequality limits the ability of young people to save.

“Don’t even get me started on how ridiculous this industry is sometimes. There’s a lot of shame around money, period,” Dunlap told Money. “That shame is not only unhelpful, it doesn’t help us move towards our goals.”

The other reason, she said, is that there is no universal advice when it comes to personal finance, but she admitted that it would spell doom for self-proclaimed all-knowing sages. It takes forces like policy change and a robust safety net of public benefits to create a society where everyone has the ability to save for the future.

Your personal finances are yours alone

Maybe you’re already on your retirement savings journey, but if you’re not, you can give yourself permission not to panic every time you read about the alleged misfortune that awaits you if you don’t have a Roth IRA. (You can also stop listening to TikToks of celebrities talking about how easy it is to get rich investing.)

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“Personal finance is just that: personal,” Dunlap said. “I hate reading those articles where people are just like, ‘You can figure out how to cut costs.’ People who are living paycheck to paycheck don’t have a Netflix subscription. They won’t go out to eat all the time.”

Whether you’re already contributing to retirement accounts or have a little change left at the end of the month, an initial baby step you can take is to seek financial education that speaks to your individual circumstances, Dunlap said.

No one but you can tell you which financial options are right for you. There is unlimited information at our fingertips, as well as forums and communities like HerFirst100k to empower you and answer your questions. Know that in finance, one size does not fit all.

“Find money advice that connects with you and doesn’t make you feel like s**t,” Dunlap joked.

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Your future loan

For those who really can’t save, break down your monthly expenses and create financial priorities that benefit your quality of life to give you a better idea of ​​your overall financial well-being. This could mean putting $100 toward paying off debt instead of retirement funds, or spending your last $20 on a gym membership and saving nothing if it comes to your fitness.

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Regardless, Dunlap advises, set goals for yourself and build healthy habits, even if you’re only saving a small amount per month. If you have to route that small amount to pay the bills, so be it. The important thing is that you are thinking about the future and starting on the goals that you will be able to achieve better as your income increases with age.

If you net enough to save with each paycheck, Dunlap recommends these concrete ways to maximize your money: Set up automatic transfers — for credit card payments or regular contributions to a retirement savings account — to make your new wise financial choices easy.

Most importantly, says Dunlaps, give yourself grace, shut out the noise and focus your energy on finding what’s right for you.