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8 moves to help snowball retirement savings

Key takeaways

  • Saving for retirement in your 20s and 30s means your money has more time to potentially benefit from compounding investment returns.
  • Using workplace retirement plans and employer matches, health savings accounts, and individual retirement accounts such as a Roth IRA means your savings could potentially grow tax-free.
  • Managing your debt, building emergency savings, and spending intentionally can also help you save more for retirement.

Your 20s and 30s tend to be about building a career, planting roots, and chasing experiences—and maybe less thinking about retirement. But these are the right decades to start saving for the day you stop working. That's because the more time you spend building a nest egg, the more total contributions you can make and the longer you'll have to potentially benefit from compounding (a.k.a. the snowball effect of when your investment returns start earning money).

With these 8 ideas on how to save for retirement in your 20s and 30s, you don't have to make big sacrifices while you're young to grow your savings for later.

1. Don't sleep on an HSA

If you're eligible, a health savings account (HSA) could help you save for both medical expenses today and other expenses in retirement. You may be able to contribute pre-tax dollars from your paycheck—which your employer might even add to—and can spend the money tax-free on qualified medical expenses, such as doctor visits and prescriptions. Just know there are limits to what you can contribute annually. In 2024, the contribution limit is $4,150 for self-only coverage and $8,300 for family coverage.

You can also invest HSA money. When you do that, you won't pay federal income taxes on any growth, and unspent money rolls over year after year. Starting at age 65, you can use the money for anything—medical or not—without a penalty and only pay income tax on withdrawals, similar to how you would with other pre-tax retirement accounts, such as a 401(k).

Read more about HSA eligibility and benefits.

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2. Maximize your employer benefits

Pensions may be a thing of the past, but you could still take advantage of company-sponsored plans, such as a 401(k) or 403(b), to help plan for a comfortable future. If your employer matches any portion of your retirement contributions, consider maxing that out by contributing up to that match amount. It's part of your compensation package, and this extra money can grow over time if invested.

The next time you're hunting for a new job or comparing multiple offers, look beyond salary and factor in retirement and other benefits that will help you save, such as higher contribution matches, shorter timelines to “vest” (or qualify for the full match value—it can take a few years!), and student loan repayment assistance.

3. Practice good financial habits

Keeping your finances in good shape can boost all your money goals, not just retirement savings. But starting with these basic moves can help you build a foundation and find more to put away for the future.

  • Balance your income and spending: You don't have to budget every penny, but understand what's coming in and what's going out so you're not doling out more than you make.
  • Stay ahead of your debt: More debt means more interest you'll never get back, which leads to less savings for your end game. Keep your savings moving in the right direction by making your minimum payments on time, limiting your total debt payments to 36% or less of your income,1 and avoiding debt with high or variable interest rates, such as with credit cards. Then, strike a balance between chipping away at what you owe and continuing to save for your long-term goals. Once you've started saving for retirement and are contributing enough to get your full employer match, consider prioritizing paying off debt with an interest rate of 6% or more.
  • Create emergency savings: From the dreaded check engine light to a sick pet, unexpected expenses may pop up more often as your life gets more complex. Stashing cash from each paycheck for emergencies could help you now and later. Having money for emergencies means you won't have to pay those bills with a credit card or loan.

4. Consider an IRA

IRA stands for individual retirement account. You can open an IRA if you aren't covered by, or in addition to, a workplace retirement plan, like a 401(k), so long as you meet the eligibility requirements. Just like with a workplace retirement plan, contributing to an IRA when you're young gives your money the potential to grow tax-deferred until you retire or are ready to start making withdrawals. With a traditional IRA, you may be able to deduct the contributions from your income when filing your federal income taxes. With a Roth IRA your contributions are not deductible, but you may be able to make qualified withdrawals tax-free as long as it's been 5 years since your first contribution.

Worried about accessing your savings in a pinch? A Roth IRA actually allows you to withdraw your annual contributions (but not any investment returns) anytime without paying taxes or penalties.

Here are 9 compelling reasons to consider a Roth IRA.

5. Check to see if you're invested

Whether you have a retirement plan from work, an IRA, or both, double-check your money is actually invested. Some employer-sponsored plans auto-enroll you in a certain fund or investment plan, but many require you to select and buy investments yourself. While all investments carry the risk of losing money, not investing means you're missing out on the potential to grow your money, thanks to long-term market gains and compounding returns.

If your retirement account is with Fidelity, you can check if you're invested by logging in and going to "positions," then looking for how much you have in "core position," "cash," or a "money market fund." Anything sitting in cash or a money market fund is able to be invested.

As for choosing your investments, you'll usually have the option to manage your portfolio yourself or an investment professional can help you create an investment plan that aligns with how much investing risk you're comfortable with and when you want to retire.

6. Use extras wisely

Whether it's a work bonus, side-gig pay, or another income stream, directing some or all of your additional income to retirement accounts is an easy way to boost your savings. Many employers let you specify what percentage of bonuses you want to automatically contribute to your workplace retirement plan. If you can, consider making this percentage equal to or more than your regular paycheck contribution.

If you use a credit card, consider one that gives you cash back rather than airline miles or perks and allows you to direct that cash right into your IRA (again, as long as you're eligible.) For example, the Fidelity® Rewards Visa Signature® Card gives you 2% cash back for purchases, which can be automatically deposited into an eligible account.2

7. Bump up your contributions 1% every year

Once you have emergency savings and higher-interest debt paid off, consider contributing 1% more of your pre-tax income to your retirement accounts. For a 35-year-old making $60,000, doing that means investing less than $12 more per week—but could translate to more than $85,000 by 67.3

Including your employer's match, aim to save 15% of your pre-tax income a year (eventually). If you're lucky, a yearly raise may boost your income, so you may not even feel the bumped-up contributions. Besides, most plans allow you to lower your contribution again anytime if your circumstances change.

But remember: Most retirement accounts have annual contribution limits, so make sure any extras or increases don't put you over. In 2024, the contribution limit for individuals under 50 is $23,000 for a 401(k) and $7,000 for a traditional or Roth IRA.

8. Splurge with intention

Saving for retirement doesn't have to mean depriving yourself. It's OK to buy new things, take vacations, and enjoy life way before you stop working. But understand how long it took you to earn that money—and how long it will take to replenish it. Reflecting on whether a splurge is worth that investment of your time and talent can help you decide when to go for it. The more you make smart money decisions, the easier it becomes to do it again. Over time, those good habits—and your savings—could help you reach your retirement goals.

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1. Because both your existing debts and your future mortgage payments are components of your household debts, the sum of both should not exceed this 36%. Using this metric, we can solve for the suitable home price so that your household has a healthy, manageable debt-to-income ratio. 2.

You will earn Points per dollar in eligible net purchases (net purchases are purchases minus credits and returns) that you charge. Account must be open and in good standing to earn and redeem rewards and benefits. You may not redeem Reward Points, and you will immediately lose all of your Reward Points, if your Account is closed to future transactions (including, but not limited to, due to Program misuse, failure to pay, bankruptcy, or death).Refer to your Program Rules for additional information. Certain transactions are not eligible for Reward Points, including Advances (as defined in the Agreement, including wire transfers, travelers checks, money orders, foreign cash transactions, betting transactions, lottery tickets and ATM disbursements), convenience checks, balance transfers, unauthorized or fraudulent charges, overdraft advances, interest charges, fees, credit insurance charges, transactions to fund certain prepaid card products, U.S. Mint purchases, or transactions to purchase cash convertible items. The cash back rewards value applies only to Points redeemed for a deposit into an eligible Fidelity® account. The redemption value is different if you choose to redeem your Points for other rewards such as travel options, merchandise, gift cards, and/or statement credit. Points are valid for 5 years from the date they were posted to the Account. Other restrictions apply. Full details appear in the Program Rules new card customers receive with their card. Establishment or ownership of a Fidelity® account or other relationship with Fidelity Investments® is not required to obtain a card or to be eligible to use Points to obtain any rewards offered under the program other than Fidelity Rewards. Eligible accounts include most nonretirement registrations as well as Traditional IRA, Roth IRA, Rollover IRA, SEP IRA, Fidelity Charitable® Giving Account®, Fidelity HSA®, and Fidelity®-managed 529 College Savings Plan accounts. The ability to contribute to an IRA or 529 college savings plan account is subject to IRS rules and specific program policies, including those on eligibility and annual and maximum contribution limits. Full details appear in the Program Guidelines new card customers receive with their card. Contributions to Fidelity Charitable® are generally eligible for a federal income tax charitable deduction. Please consult with your tax advisor. The list of eligible registration types may change without notice at Fidelity’s sole discretion. For more information about whether a particular registration is eligible, please call 1-800-FIDELITY (800-343-3548).

3. This information is intended to be educational and is not tailored to the investment needs of any specific investor. Approximation based on a 1% increase in contribution rate. Continued employment from current age to retirement age, 67. We assume you are exactly your current age (in whole number of years) and will retire on your birthday at your retirement age. Number of years of savings equals retirement age minus current age. Nominal investment growth rate is assumed to be 5.5%. Hypothetical nominal salary growth rate is assumed to be 4% (2.5% inflation + 1.5% real salary growth rate). All accumulated retirement savings amounts are shown in future (nominal) dollars. This assumes no loans or withdrawals are taken throughout the current age to retirement age.

Your own plan account may earn more or less than this example and income taxes will be due when you withdraw from your account. Investing in this manner does not ensure a profit or guarantee against a loss in declining markets.

Keep in mind that investing involves risk. The value of your investment will fluctuate over time, and you may gain or lose money.

Fidelity does not provide legal or tax advice. The information herein is general and educational in nature and should not be considered legal or tax advice. Tax laws and regulations are complex and subject to change, which can materially impact investment results. Fidelity cannot guarantee that the information herein is accurate, complete, or timely. Fidelity makes no warranties with regard to such information or results obtained by its use, and disclaims any liability arising out of your use of, or any tax position taken in reliance on, such information. Consult an attorney or tax professional regarding your specific situation.

The information provided here is general in nature. It is not intended, nor should it be construed, as legal or tax advice. Because the administration of an HSA is a taxpayer responsibility, customers should be strongly encouraged to consult their tax advisor before opening an HSA. Customers are also encouraged to review information available from the Internal Revenue Service (IRS) for taxpayers, which can be found on the IRS Web site at They can find IRS Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans, and IRS Publication 502, Medical and Dental Expenses (including the Health Coverage Tax Credit),online, or you can call the IRS to request a copy of each at 800.829.3676.

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