Saving for retirement is challenging. At least, that appears to be the case when looking at the alarming statistics on Americans’ savings habits, debt, and fiscal responsibility. So, what’s going on? Why are people having difficulties saving for the future?

It may all start with limited formal financial education combined with our consumption society. The result is many people living with too much debt. According to the Federal Reserve, household debt hit a record $14.6 trillion in Spring 2021. If you had to write a check, it would read $14,600,000,000,000.

340 million people share that amount, but if the average American has $90,460 in all types of consumer debt products–from student loans and credit cards to mortgages and personal loans–what age groups assume the highest amount? Let’s break it down by generation:

• Gen Z (18-23 yo): $16,043
• Millennials (24-39 yo): $87,448
• Gen X (40-55 yo): $140,643
• Boomers (56 – 74 yo): $97,290
• Silent Generation (75+ yo): $41,281

^{Source: Debt.org}

The number one financial regret for many people is not starting a savings plan for retirement early enough. So we’ve broken down the fundamental priorities to consider at each age that will help you stay on track for the future. Remember, it’s always a good idea to check with a financial advisor before you get started.

Aged-Based Retirement Strategies

In your 20s

Ignoring retirement savings in your 20s means missing out on ample opportunities to grow it drastically. However, these tips can get you there if you want to retire on time and maintain a comfortable lifestyle.

• Create an emergency fund. Your goal should be four to six months’ worth of living expenses in an accessible savings account. Think about it like this: if you don’t have enough money to cover a car repair or other emergency, you can’t start saving for the future.
• Open a retirement account and contribute to it. Do what it takes to open and add money to 401(k) or IRA.
• Be smart about investing. Do your research to find the best investment vehicles. The stock market can be a little scary, but it’ll give your money the greatest chance to work for you when you’re investing for the long haul. Index funds, which don’t require as much research, may be a consideration.
• Pay off debt. Get ahead of high-interest debt by knocking it down before you start using the extra money you have for savings. In your twenties, know that it’s a great time to set yourself up to be financially healthy. Your 65-year-old self will appreciate the sizable nest egg you accrue.

In your 30s

If you haven’t started saving and you’re in your 30s, there’s no need to fret—but it is time to start a retirement savings fund. If you have started saving but don’t have a plan, now’s the time to create one.

• Get a grasp of your cash flow. Spend time going over your budget, so you understand where your recurring expenses are. It’s also where the savings “Aha! Moment” will set in because it’s here that you’ll identify what is quietly draining your wallet. Once you know how much you can put aside each month, automate it, so it seamlessly transfers into your savings account.
• Build an emergency fund. If you haven’t started one, it’s time. Set a goal of $5,000 to $10,000 or four to six months of take-home pay.
• Pay down debt. Work to strike a balance between saving for retirement and paying off the debt you have.
• Keep your retirement savings on target. Resist cutting back on retirement savings to meet other expenses, and review and adjust your savings and investing goals annually.

In your 40s

If you’re in your 40s and want to retire in 20-30 years, there are a few things you can do now to make sure you’re comfortable later in life.

• Focus on consistent investing. By this time in your life, you can still take advantage of compound interest with a consistent, disciplined approach. It’s not too late to begin investing in your 40s. So get started if you haven’t done so.
• Maintain your emergency reserves. We all face unforeseen events that impact us financially–job loss, home or car repairs, medical expenses, etc. An emergency reserve provides flexibility to take care of these situations without interrupting your retirement contributions.
• Pay off debt. If you have debt outside of your mortgage, like student loans, car loans, or credit card debt, then start making an effort to get it all paid off.
• Consider investing in a health savings account (HSA). HSAs pay for out-of-pocket medical expenses to be used now or years later during retirement. The major advantage of this type of savings account is that your contributions are tax-deductible, withdrawals for medical expenses are tax-free, and you can grow the account tax-free.

In your 50s

It’s never too late to establish a financial plan that aligns with your goals. You can still build your nest egg with the right moves.

• Pay down debt. At any age, paying down debt as quickly as possible can free up more cash to put into savings.
• Fine-tune your budget. Review your budget and eliminate any excesses. Food is an area where most people overspend, so consider creating a meal plan.
• Keep investing. Establish a mix of different types of investments that are aggressive enough to reach your goal but be cautious, so you’re not tempted to cash out when the market drops. One possible strategy if you administer your own retirement fund or have a non-retirement portfolio, is to set up automatic investments to buy more shares when stock prices are cheaper, and buy fewer when they’re expensive.
• Max out your contributions. If you have a retirement plan at work, contribute enough to maximize the match offered by your company. This is a great way to grow your retirement fund with “free money” from your employer. In addition, if they provide any additional retirement savings plans, take advantage of them.

In your 60s

Be prepared, so you enter retirement financially healthy and on solid footing.

• Layout a transition/retirement budget. Your income during retirement will likely drop off from what you were earning during your working years. It can be difficult to make this transition for some retirees and cause them to burn through their savings at a faster rate than they anticipated.
• Continue to invest. There’s no one-size-fits-all strategy here. Depending on your lifestyle and risk tolerance, one smart strategy that may work is to keep a portion of your retirement savings invested in high-quality stocks. Although it can be temperamental at times, the stock market is still one of the best wealth creators.
• Have a withdrawal plan for your money. Keep in mind how much you plan to withdraw each year so you can consider tax implications. This way, you’ll keep as much as possible of the money you’ve spent a lifetime earning. In addition, have a clear plan for withdrawing money before retiring.
• Map out a strategy for social security benefits. You have three choices awaiting you when it comes to social security benefits: 1) file early (62-64), 2) wait until full retirement age (FRA) (65-67), or wait until after full retirement age (FRA) (age 68-70). Understand the ramifications of when to file for benefits along with the advantages and disadvantages.

There are no right or wrong answers when it comes to a retirement strategy—there’s just the right choice for what you need. Commit to at least some sort of savings now to ensure you get everything you want in retirement.

^{HomeStreet Bank does not provide tax, legal, or investing advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or investing advice. You should consult your own tax, legal, and financial advisor before engaging in any transaction.}