Retirement Saving in Your 20s-How to Lay the Groundwork Now

There are few things further from most 20-somethings’ minds than saving for retirement.

If you're like most Americans, you use your savings account to keep a little bit of money for emergencies—and then inevitably spend it. This regular filling and draining of savings accounts can lead to bad financial habits and future stress that, frankly, no one needs.

It's not too late, though. You can avoid being one of the 69% of millennials not saving for retirement. There's still time to get your savings in order. All it takes are a few simple steps and a couple of lifestyle changes.

Here's how to save for retirement in your 20s:

Create a retirement savings plan—Before you can be successful at saving, you need to create a budget that prioritizes saving for retirement. Studies show that nearly 50% of millennials would be unable to pay their bills if their next paycheck were withheld. That's not good. If you want to be financially healthy, commit to tracking your finances regularly. Determine which recurring costs are crucial and which could be eliminated—or at least reduced. While that might sound intimidating, your financial institution may offer money management tools and a retirement income calculator to help you with the process. Track your long-term savings goals, monitor financial accounts, visualize spending habits, track net worth month-to-month and more.

Get your 401(k) and/or Roth IRA in order—If your employer offers a 401(k), enroll in it—especially if it comes with a contribution match. The beauty of a 401(k) is that the money comes out of your paycheck and goes straight into an account where it can begin growing. It's deposited before it's taxed, which means more money goes in and grows at a faster rate. You can't access a 401(k) before a certain age without a penalty, which is more incentive to deposit what you can and let it be.

If you're self-employed, consider a Roth IRA, which has similar rules on accessing the account before retirement, but is run through your financial institution. You deposit what you can whenever you're able, and your account grows over time.

Find extra cash—As you look at your budget and savings, it will become abundantly clear that more money could be useful. Even if you're not in dire straits, a few extra bucks every month couldn't hurt. Start by asking for an appropriate raise at work. Talk to your supervisor about any extra work you've done, additional responsibility you could take on and cost of living increases.

You can also turn your talents and hobbies into spare cash during your free time—you'd be surprised how quickly it adds up. Whether it's selling art, planning events or house/pet sitting, these extra sources of income can go straight toward your savings goals.

Cultivate a relationship with a financial advisor—At this age, you probably haven’t thought much about meeting with a financial advisor. But with time on your side, starting the process now is your best (and least painless) option. Saving for retirement now gives you time to save more, time to let your investments grow and time to plan.

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