5 Things Every Millennial Should Know About Saving For Retirement

Millennials, born between 1981 and 1996, may not be as far from retirement as they think. The eldest are already over 40, and with full retirement age at 67, they might need to buckle down in order to reach their goals. Many may still be playing catch-up with retirement savings, paying off debt, investment diversification and fully utilizing available employer benefits.

Speaking with a financial advisor is one way to assess where you stand on the road to retirement. They can work with you to create a customized roadmap so you can turn your retirement goals into a reality. 

Here’s what millennials need to keep in mind when planning for retirement.

5 things millennials should know about saving for retirement

1. Save now (even if you don’t think you should)

For something that feels so far away, it’s easy to put off retirement savings and planning. But the more you save now, the less stressed your future self is likely to be.

You can do it, through:

1. An employer-sponsored retirement plan. Using an employer-sponsored retirement plan, like a 401(k), is an effective way to save for retirement. Many employers offer matching contributions, which is essentially free money that can significantly boost your savings over time. These plans also offer tax benefits. With a traditional 401(k), your contributions reduce your taxable income for the year and your funds grow tax-deferred. Some employers offer Roth 401(k)s, which provide tax-free withdrawals in retirement.
2. An IRA. If you have nothing else, open an IRA account with a robo-advisor and make auto payments to your account every month. Even $10 or $20 — which seems small — can add up over time. You can use a traditional or Roth IRA — the biggest difference is how you’re taxed. If you think you’ll retire in a higher tax bracket, go with a Roth IRA, which provides tax-free withdrawals in retirement. Otherwise, go with a traditional IRA, but keep in mind that your withdrawals will be taxed when it comes time to take the money out.
3. Additional income. Get a bonus? Add it to your savings. Finish paying off a debt, like a car payment or student loans? Add those payments to your investment account. Did you pick up a side hustle? Use it to pay off debt sooner and stash some of it away in your retirement accounts. Big contributions are great but aren’t always feasible, especially when you have other obligations right now. Use what you have on hand to make small, smart contributions.

Here’s how much you should have saved for each age. 

2. Diversify your retirement portfolio

There’s no one way to save for retirement. You can have a work-sponsored 401(k) as well as an IRA. You can have a taxable investment account and a high-yield savings account. The more accounts you have, the more protection you’re giving your future self. That’s because spreading your money out across multiple accounts and securities is one of the best ways to safeguard your investments.

Avoid putting all your cash into one stock or asset. Instead, look for low-cost index funds and exchange-traded funds (ETFs) that give you exposure to dozens, sometimes even hundreds, of individual stocks with a single purchase. With employer-sponsored plans, a popular option is target-date funds, which automatically adjust your asset allocation over time to align with your desired retirement date.

3. Capitalize on employer benefits

If you’re lucky enough to have an employer matching program with your work-sponsored 401(k), you can save even more for retirement now.

Employer matches vary widely from company to company, but it’s a good idea to vet potential employers for what they contribute to these plans. Two of the most popular types of matching are dollar-for-dollar and partial matches. Partial matches are when your employer matches contributions up to a certain amount. You might see companies match 50 percent of contributions up to, say, 6 percent of salary. Here’s what that looks like:

Say you earn $80,000 a year. If you contribute 6 percent of your salary, or $4,800, your employer would pitch in $2,400 a year on top of your contributions.

For 2025, all workers can contribute up to $23,500. (While not relevant for millennials, it’s important to note that those age 50 to 59 and 64 and older can contribute an additional $7,500, while those between ages 60 and 63 can contribute an additional $11,250.) Any employer contribution comes on top of these maximum contributions. That’s a hefty chunk you can put toward your retirement each year with your employer’s help.

You can also take advantage of other employer benefits, like if they have a student loan match program where your employer matches your student loan payments every month, up to a certain dollar amount or percentage. That could help you pay off your debt sooner and devote more of your money to retirement savings.

4. Make regular goals

If you’re in the 40 (or almost 40) club and you haven’t given retirement much thought, you have some catching up to do. Give yourself regular, attainable goals to meet. For instance, you may start out by making small, regular contributions to your retirement account. Then you might increase those contributions in a few months.

You may also find other ways to maximize your savings. Let’s say you have a side hustle to help pay off outstanding debt. Once the debt is paid off, you can use that income to supplement your savings. That could mean adding more money to your IRA or 401(k). It could also cover regular home costs that your paycheck would normally cover and you can then increase your 401(k) contributions as much as you can afford.

5. Don’t be afraid to adjust

Your goals don’t have to look just like this, but setting and revising your retirement goals are important to make sure you’re on track to retire comfortably. While you’re not fresh out of college, you still have time to get your retirement plan in order.

Think about how much money you’ll need to sustain your lifestyle throughout your retirement. You can use Bankrate’s retirement calculator to help you find the right number. 

Use your resources now to help you reach that goal. For instance, can you boost your contributions with your current employer or look for a new job that has a hefty employer match? Can you pay off your home before you retire or do you plan to downsize to save on expenses?

Your life at 70 years old won’t look the same as it does at 40, so it’s alright if plans change. Give yourself a bit of grace and remember that it’s not a bad thing if it doesn’t go according to plan. Have a backup plan (or two). Your retired self will thank you.

A financial advisor can help you devise a plan and adjust it along the way to retirement as needed.

Bottom line

While retirement may seem like a long way off, but the next 25 to 30 years may go by quicker than you think. The important thing is to start today, even if it’s small. You’ll give yourself the time to get in the habit of saving and investing, giving you a better likelihood of reaching your goals.

Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.