Young couple considering early retirement.
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While some Americans think starting to save for retirement in your late 20s is ideal, financial advisors say it can pay to start even sooner — especially if you plan to retire early.
On average, surveyed Americans say you should start saving for retirement at age 27, according to a recent report by Empower, which polled 1,001 adults on June 2. Respondents also say you should be able to retire at age 58.
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Those “ideal targets” in Empower’s report differ from what other reports indicate people are doing.
A separate 2024 report by the Transamerica Institute and Transamerica Center for Retirement Studies found that, on average, Gen Xers and baby boomers began to save for retirement at ages 30 and 35, respectively. But Gen Zers and millennials started to save earlier at average ages of 20 and 25.
Meanwhile, the average goal age for retirement among Empower respondents is much sooner than the typical retirement age. As of 2024, men on average retire at age 64 while women retire at age 62, according to the Center for Retirement Research at Boston College.
‘Doable,’ but earlier is better
Starting your retirement savings in your late 20s and aiming to retire in your late 50s can be ambitious, but it’s “definitely doable,” said Gloria Garcia Cisneros, a certified financial planner at LourdMurray, an investment and wealth management firm.
“Three decades is a good amount of time for your money to grow and compound,” said Garcia Cisneros.
However, if you’re getting a later start, “the trick” is to make sure you’re saving more aggressively, said Garcia Cisneros.
About 40% of surveyed Americans said they were behind on retirement savings, according to a 2024 CNBC survey, which polled more than 6,600 adults. Of those who felt behind, many pointed to getting a late start, debt or insufficient income.
In fact, not starting to save or invest earlier is a common regret. Nearly half, or 45%, of survey respondents said they wish they’d started to save earlier, Empower found.
A separate report by Charles Schwab found that surveyed women typically began investing at age 31. However, 85% said they wish they started at an earlier age.
The sooner you start, the better, experts say.
“Start saving as early as possible because you have the beauty of compound interest,” said Carolyn McClanahan, a CFP and founder of Life Planning Partners in Jacksonville, Florida.
How starting early can work in your favor
Compounding can turbocharge your money, experts say. Compound interest refers to interest calculated on the initial principal and on accumulated interest of previous periods and typically applies to savings accounts, bonds and loans, according to a report by Fidelity.
Compound returns can include compound interest, but also refers to other kinds of investment returns like dividends and capital gains.
“Time fuels the potential power of compounding,” according to the report.
If you start saving in your early 20s, “that money has more time to grow, and that’s going to give you a bigger nest egg,” said McClanahan, a member of CNBC’s Financial Advisor Council.
For instance, let’s say someone began to save and invest for retirement at age 22, and they put away $100 per month. Assuming they get a 6% compounded return every month, they could have over $242,000 in savings by the time they’re 65, according to CNBC calculations.
Those few years of early investing can make a difference. If they started to save $100 per month at age 27, assuming the same retirement age and rate of return, their retirement savings would be roughly $174,000.