You Won’t Believe How Little a 21-Year-Old Needs to Save to Retire Rich

Updated March 20, 2017
by Susan Shain
when to start saving for retirement

Man, I blew it.

As I turn 30, I’m just starting to think about retirement.

I mean, during my freewheelin,’ travel-happy 20s, was I really supposed to think about what to do when I turned 65?

Apparently, yes. If I had, I could be sitting pretty right now. All thanks to the power of compound interest

Which my dad definitely tried to tell me about in high school, but I was more interested in who Britney Spears was dating and how many different things I could make with a pack of ramen (the answers: K-Fed, and lots).

So if you know any about-to-be college grads, you should probably share my recent discoveries with them.

If they start now, it’s crazy how little they’ll need to save if they want to have enough money for retirement.

When Should You Start Saving for Retirement?

If you know me, you know I stopped understanding math somewhere around sixth grade.

Thankfully, there are retirement calculators to do the math for you.

I decided to go with SmartAsset’s Retirement Calculator, which accounts for taxes and inflation.

Here’s what I plugged in:

Location: Burlington, Vermont (#lifegoals)

Annual salary: $36,000 (the average starting salary for liberal arts majors)

Annual retirement expenses: $25,200 (70% of your income)

Retirement age: 65

Rate of return: 7% (fairly typical in retirement calculations)

Inflation rate: 2%

The answer?

If you start saving when you’re 21, you only need to save $100 per month, or $25 per week to have enough in retirement.

You might be thinking you’ll need more to live on than $25,200 per year — but keep in mind you’ll likely have paid off your mortgage and car by then, and you’re probably going to make more than $36,000 at the peak of your career, so your social security benefits will be greater.

This figure also doesn’t account for any employer-sponsored retirement plans. If your company offers one, definitely take advantage of it!

Retirement calculators can’t predict the future, and these numbers certainly don’t apply to everyone. They’re just estimates to inspire you to start saving now.

Because here’s the thing: If you save just $3.57 per day, you’ll be pretty solid in old age.

Since you’re never going to do this on your own — unless you’re some magical being with a wealth (ha) of self-control — I have one piece of advice: AUTOMATE IT.

Open a Roth IRA and set up an automatic transfer from your checking account each week. $25 every Monday. It’s not that hard.

I set up an automatic transfer (for a whole lot more, ‘cuz I’m old) last year; it’s the only way I’ve finally begun contributing.

You can also find a bunch of mobile apps out there to help you start investing.

One we like is Stash. It’s available for both Android and Apple smartphones, and makes it super simple to (finally) take the dive into investing, even if you don’t have a whole lot of spare cash. 

You’ll even get a free $5 to start investing with for entering your email here, downloading the Stash app and setup your account with the same email address. Within two business days you’ll see the bonus added to your account.

So, please, learn from my mistakes — do this, and do it now!

If you want to run your own numbers (fair warning: it’s slightly terrifying), just plug them into the calculator above.

Your Turn: Do you know anybody who’s about to graduate college? Share this with them!

Disclosure: You wouldn’t believe how much coffee The Penny Hoarder team goes through. This post contains affiliate links so we can keep the grinds stocked!

Susan Shain, senior writer for The Penny Hoarder, is always seeking adventure on a budget. Visit her blog at, or say hi on Twitter @susan_shain.

by Susan Shain
Contributor for The Penny Hoarder

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