Two blue chairs on a beach

Many young people aren’t actively saving for retirement. A 2019 GOBankingRates survey found that 45% of Americans have 0% in their savings accounts. Almost 70% of Americans have under $1,000 saved.

Most respondents said they weren’t saving more because they were busy living paycheck to paycheck. One-fifth claimed that their cost of living was too high to save money.

Younger generations such as millennials have many money problems, which makes it harder for them to prepare for retirement. However, not preparing for retirement is one of the biggest mistakes anyone can make. Imagine living your golden years with an empty bank account. You won’t be able to enjoy the freedom if you’re too busy worrying about money.

How can young people prepare for retirement today? Start by following these simple steps:

Track your spending

The best way to start saving is to track your spending. At the end of each month, compare your income to your savings. How much of your income goes to unnecessary purchases? What can you cut back to save more money?

The only way to answer this question is to track your spending. I use the Spending Tracker app to manually track each dollar that goes in and out of my account. I record a new transaction every time I spend a single penny.

You can also try the more advanced Mint app, which tracks your net worth across multiple accounts. This app provides a great way to monitor your bank account, PayPal account, and stock portfolio.

Set goals

It’s challenging to accomplish anything without a plan. Setting goals gives you focus and direction. It helps guide you to where you need to go.

According to Rich Habits author Tom Corley, 70% of self-made millionaires set at least one primary goal. They plan out how and when they’ll achieve that goal along with the steps they need to take.

I personally love bullet journaling as it gives me a convenient way to track daily, weekly, monthly, and yearly goals. I can write down my daily to-do lists and track how many days I stay on top of other goals such as writing and exercise.

Think about the future

Take a moment and consider what you want your retirement to be like. Will you live in a fancy beach house in the Bahamas? Will you be traveling the world with your significant other? Or will you be busy working because you didn’t prepare for retirement?

These thoughts might seem scary, but they can become a reality for anyone who hasn’t taken the time and effort to prepare for retirement. Unfortunately, too many young people are blissfully unaware of what the future holds for them. They often don’t realize that they might run out of money in their golden years.

One Stanford study showed people digital avatars of themselves and then asked how they’d allocate $1,000 between four options – buying a gift, investing in retirement, planning an event, or putting it into checking. Researchers presented half the participants with an older avatar complete with gray hair and jowls. Those participants who saw older versions of themselves put twice as much money in retirement compared to other respondents.

A hand putting a coin in a piggy bank
Photo by Damir Spanic on Unsplash

Start a retirement plan as early as possible

Investing as soon as possible gives you a massive advantage over your peers. Compound interest ensures that your money grows over time. The longer you have money in the market, the more it will grow.

For example, a NerdWallet analysis found that a 25-year-old millennial who earns $40,456 annually and invests 15% of their savings could potentially make $3.3 million by the time they retire. The investor only has to put down $563,436 to retire as a multi-millionaire.

Stock prices may fluctuate, but the S&P 500 always goes up over time. Putting money into stocks or index funds is one of the few ways you can outpace inflation.

Get a pay raise

Only 39% of people negotiate for a higher salary, according to a Robert Half study. Asking for a raise could make the average American an extra $7,500 each year.

Imagine if you’re 25 and got a $7,500 pay raise. If your salary remains the same until you retire, you’d still earn an extra $300,000 across 40 years. Plus, most companies base bonuses and raises based on a worker’s salary.

Don’t be scared to ask for a raise. After all, the odds are in your favor. A survey by Zoro found that over four-fifths of people who asked for raises got them, though 33.5% received less than they requested. Learning how to negotiate for a higher salary is one of the most valuable techniques you can learn. After all, the worst-case scenario is that your manager says “no.”

Never stop learning

One of the best ways to get ahead in life is to keep expanding your mind. There’s no shortage of classes or workshops available to you, thanks to the internet.

You can learn skills that will help you move up in your career or develop a side hustle. I’ve spent many hours walking dogs and writing for extra money here and there. These jobs help supplement my income, especially during unemployment.

Develop multiple streams of income

Most people’s primary income comes from their regular day job. While there’s nothing wrong with this approach, it’s good to have multiple streams of income for extra money. Extra income streams are especially useful if you get laid off as you’ll still have money to spare.

Most self-made millionaires rely on multiple income streams as their day job probably won’t make them seven digits. Some common income streams include stocks, real estate, and side businesses.


Work hard now so you can relax later.

You don’t want to reach your sixties and have nothing to show for your years of hard work. You’ll end up regretting every single dollar you spent on frivolous purchases. You should spend your retirement years relaxing instead of fretting over money. Unfortunately, this may be the reality for too many people.

Take care of your financial situation now before you reach the point of no return. Carefully analyze your spending and find out where you can cut back. Make the painful sacrifices now so that your future self will be happy.