 Saving for retirement from as early as your 20s is a good plan, but maybe it isn't as easy as it sounds. I mean, the very idea of saving for retirement from as early as your 20s sounds like much responsibility, especially because you have so many other things competing for your financial attention and besides, you barely make enough money to sustain you or set out your daily or monthly expenditure. Here's something you need to understand about planning and saving for retirement in the early stage of your life. You'll be able to invest less, yet gain more. Taylor Larry Moore, an American author, said, letting your money work for you is a key component of saving for retirement, compound interest, dollar-cost averaging, tax-deferred savings, and diversification. Help lower your risk and boost your return on investment over time. The truth is that if you want to retire as a millionaire, you have to make smart money moves. Actually, not just if you want to retire a millionaire, if you want to retire at all, then you need to be intentional about it. You must work towards it. So, in this video, I'll share with you how to save for retirement in your 20s. If you're new here, consider subscribing so that you don't miss out on exciting videos like this. 1. Set financial goals The first step to saving for retirement is to have a plan. Anna Colton, a consumer banking and investment strategic planner, said, knowing how much you need for retirement based on your personal vision for your future makes the process of saving and investing a lot more rewarding. You can work with a financial advisor on how to set and achieve these goals. You need to set financial goals to help you because it isn't just about saving money, but about meeting your goals. So, how much money do you want to have by the time you're retired? At what age do you plan on retiring? How long will you save to achieve this goal? Etc. These are all the necessary questions you should ask yourself and answer as well before you start saving. Mike Piper, an accounting expert, once said, the goal of retirement planning is to create a plan. It feels silly to come out and say that, but from what I've seen, most investors never actually take the step of creating a concrete plan. Instead, they read a few articles about various retirement planning topics and they live it at debt. And many investors don't even do that much. The more specifically you've planned how you'll manage your portfolio and your finances in general, the less likely it is that you'll have to go back to work or dramatically reduce your spending later on in retirement. The truth is that it can be a little overwhelming figuring out what you want your retirement to look like, especially now that you're only just starting your career and barely making enough to take care of yourself and your immediate needs. But you can start by taking it one step at a time or you can approach an expert for help. You don't need to put a large sum of money away monthly to achieve your retirement plan. You can start with as little as 5% of your monthly income and start increasing it as you progress in your career. Amanda Klayman, a financial therapist, has one of the best suggestions that can help, according to her. It can help to think of the broader goal of preparing for retirement in its parts. Saving money and putting it aside is one part. Opening an investment account and choosing your location is another part. Reviewing and readjusting is another part. Set a timeline for studying through each of these components. For example, to figure out how much to save, you might want to explore your cashflow plan in detail or play with some retirement calculators to come up with a target. How much time do you think those activities will take, given the other goals and obligations in your life? So start now by getting a financial plan to pay off your debt if you have any. Once you have decided what your retirement goal is and how much you want to save, it is time to start working towards achieving that goal. But first, you have to clear out outstanding debts if you have any. One of the secrets to improving your saving habit and also pay off your debt as a result is to leave below your means. Because if you don't, how will you ever make enough money to pay off your debt? Quit living from paycheck to paycheck so that you don't spend more than you earn. Spending more money than you earn will lead to debt. Keep your expenses to the minimum as much as possible. Three, take advantage of compound interest. Okay, you probably feel like saving for retirement as early as your 20s is a little too much to ask. But when you understand how compound interest works, I bet you will think differently. So, saving sooner means investing less but getting more. The sooner you start saving, the more time your money has to grow. This means that even if you invest less money overall, you could end up with more for your retirement. Let me give you an instance that was once reported by Sien and Money. Say you start at age 25 and put aside $3,000 a year in tax deferred retirement account for 10 years and then you stop saving completely. By the time you reach 65, your $30,000 investment will have grown to more than $338,000, assuming a 7% annual return, even though you didn't contribute a dime beyond age 35. On the flip side, if you don't start saving until you're 35 and save $3,000 a year for 30 years, you're investing three times as much money. But because the money missed out on those 10 years of growth, that larger investment will result in less money, only about $303,000, assuming the same 7% annual return. So, saving for retirement in your 20s will help you reap the benefit of time for your investment to grow and compound. 4. Open a 401k account One easy way to save for retirement will be to automate the process, find a way to save a stipulated amount of money every month without actively doing so. For instance, have you considered opening a 401k account? A 401k plan is a company-sponsored retirement account that employees can contribute to. It allows you to invest money into an account earmarked for retirement without paying taxes on the gains until you reach retirement age. Alternatively, another type of 401k allows you to pay taxes on the money now at your current, most likely, lower rate instead of later when your salary is much higher. A 401k account is mostly offered by employers. However, in a situation where it is not, you can open yours or sign up for a Roth IRA. You'll fund it with money out of your paycheck that's already been taxed. 5. Ask for help Financially, you need to understand that no one knows it all. We all need help from time to time, so why not ask for help to deal with your retirement? You can either get a mentor or financial expert that can explain a few things about savings and investment to you so that you can make sound choices as you decide the kind of investment that you want to try out. Anna Colton said, When it comes to preparing for retirement, I recommend turning to professional guidance, either online or in person. Professional financial service advisors have a wealth of information to help you develop your confidence in managing money and investing in the market. Again, if you indeed plan to enjoy a beautiful future with no money challenge, then now is the time to plan towards it. Now is the time to save for retirement so that you can retire as a millionaire. It might be pretty challenging, but it isn't impossible if you know what steps to take.