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

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

Invest your money.

Stop buying coffee and avocado toast.

Young working people have likely 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 confirm, what these admonishments fail to recognize is that many workers quite literally cannot afford to rub two nickels together, let alone put 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 historic inflation. Even among those earning between $100,000 and $150,000, 29% reported the same, according to a 2022 LendingClub report. (For context, the U.S. median household income was an estimated $71,186 for the same year.)

Data also says that the younger you are, the less you’re likely to earn: A survey from Capital One found the median salary for 20- to 24-year-olds in the U.S. is just $35,586. Pile on student debt, soaring housing costs and various other everyday expenses, and you’ll find young people are barely scraping by.

About what you’ve been told

Why does the financial advice industry so often chalk saving money up to a matter of personal choices and discipline? According to Tori Dunlap, founder of the finance and career platform HerFirst100k, it’s probably because emphasizing individual responsibility is a lot easier than having an honest conversation about the way wage discrimination and wealth inequality limit young adults’ capacity to save.

“Don’t even get me started about how ridiculous this industry is at times. There’s a lot of shame around money, period,” Dunlap told Money. “Not only is that shame not helpful, it doesn’t help us progress towards our goals.”

The other reason, she said, is that there is no universal advice when it comes to personal finances, but admitting that would mean ruin for those who tout themselves as 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 to not panic every time you read about the alleged misfortune awaiting 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.)

“Personal finance is just that: personal,” Dunlap said. “I do 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’re not going out to eat all the time.”

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

No one but you can tell you what financial choices are right for you. There’s limitless information at our fingertips, as well as forums and communities like HerFirst100k to empower you and answer your questions. Just know that in finance, one size does not fit all.

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

Your future self

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

Regardless, Dunlap advises, set goals for yourself and build healthy habits, even if you’re only saving a small amount a month. If you have to reroute that small amount to pay bills, so be it. What matters is that you’re thinking about the future and getting started on goals you’ll be better able to achieve as your income increases with age.

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

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

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