• Only about half of Americans under 35 had money in retirement accounts in 2022, according to the latest data available.

• Among young adults who do have retirement accounts, the median balance was $18,800.

• Time is younger savers’ biggest advantage, since even modest early contributions can compound significantly for decades.

If you’re in your 20s or early 30s, you may not be thinking much about retirement. Only about half of U.S. households with a reference person under age 35 had any money in retirement accounts in 2022, according to the latest available data from the Federal Reserve’s Survey of Consumer Finances.

More recent data from Fidelity Investments tells the same story: On average, savers under age 35 had almost $26,000 set aside in IRAs and 401(k)s. Savers under age 28 had an average balance of $13,500.

That makes young adults the working-age group that’s the least likely to have dedicated retirement savings. This makes sense, of course: In your 20s and 30s, your career is just starting (or you may be in school), so in many cases, your income and net worth are low.

And while only half of young people have retirement accounts, that may be changing. The survey found that this age group’s participation rate is growing—it’s continually increased over the last decade.

If you do manage to contribute to a retirement account at this age, you’re maximizing one key advantage: time.

“A dollar saved at 25 is worth perhaps four or five at 55, not because of some magical formula, but because it gets 40 years to quietly compound while you’re busy doing other things,” said Eric Ludwig, PhD, CFP, RICP and director of the Center for Retirement Income at The American College of Financial Services. “The tragedy isn’t starting with little; it’s waiting.”

Early adulthood can make saving feel hard, but time is still on your side. Even if you can’t contribute much—even $30 a month (a dollar a day)—that money doesn’t just add up. It compounds.

For those ages 18–34 who reported having retirement accounts in 2022, the median balance was $18,800. Not surprisingly, that figure is significantly lower than the balances reported by older age groups—but it’s not nothing. For many, it’s a significant sum.

At this stage of life, your priority should be simply building the habit of saving for retirement, Ludwig said.

“A reasonable early benchmark is working toward roughly one year of core living expenses saved by the early-to-mid 30s, recognizing that debt repayment and housing costs compete heavily for cash flow.”

The median is the midpoint, meaning half of the group has more saved and half has less saved. Using the median instead of an average reduces the skewing impact of unusually high or low balances, which gives a more accurate representation of the typical individual.

“If you’ve recently started saving for retirement, remember to consistently contribute to accounts like a 401(k) or individual retirement account (IRA), even if the amount is small to start,” said Mindy Yu, CIMA, senior director of investing at Betterment.

Here are her tips to boost your retirement savings:

• Invest in your future. Once you can support your basic living expenses, start contributing toward your retirement fund. Even 1%-2% of your salary makes a difference.

• Automate your savings: Set up a recurring transfer from your checking account to your emergency fund. Start small and increase it gradually as you can.

• Use employer benefits: Some employers offer various benefits, like a 401(k) match, HSAs, FSAs, and even student loan repayment help. See what is available to you and try to maximize these benefits. At minimum, you should try to contribute enough to earn your employer’s 401(k) match.
  

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