An economics scholar gets real about how to save for retirement in your 20s, 30s, 40s, and beyond.

By Liz Loerke
Updated May 29, 2019
Retirement planning - planning for retirement at all ages
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Everybody keeps telling you you should have started saving for retirement, like, yesterday—but is it really true? In an ideal world, you need about eight times your annual salary to stop working, according to Teresa Ghilarducci, professor of economics and policy analysis at the The New School and the author of How to Retire With Enough Money.

Eight times your yearly income is a lot of money. So, yes, it's smart to start thinking about it (not panicking about it—just doing what you can) as early as possible. To get your retirement planning on the right track in your 20s, 30s, 40s, and beyond, pay attention these no-nonsense retirement saving dos and don'ts by age, straight from Ghilarducci.

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What Retirement Planning Should Look Like in Your 20s

“If your company offers a 401(k), the decision to participate is a no-brainer. But if you aren’t offered any way to save at work, you need to start an individual retirement account [IRA] with your first paycheck. In either case, you should try to save 15 to 20 percent of your salary, which can include your employer’s match. In this case, more is more.”

Do use a debit card—or cash.

“If you need to use a credit card because you can’t pay for a purchase in that moment, that means you can’t afford it. This includes not just products but also evenings out. If you do get a credit card, have only one. (Note that store cards look bad to credit analysts; get a bank credit card instead.) Then keep monthly charges below 10 percent of your credit limit and pay them off in full. No matter how low your interest rate, you should never have a balance at the end of the month.”

Don’t go into debt for grad school.

“I find a lot of students are borrowing money to get a master’s degree. For a professional degree—law, teaching, social work—that’s one thing. But for general education it’s not going to have a positive rate of return. Take an intensive course instead. You can get badges of expertise on Coursera and other online programs for a lot less money without leaving the labor market.”

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What Retirement Planning Should Look Like in Your 30s

“One of the biggest decisions comes when you start a family and have to determine whether one parent stops working. It’s a personal choice, but after two years, staying out of the labor market will have hurt that parent’s future earnings. Even staying out for six months can have an impact. It’s also important to factor the cost of child care into your decision to have a family.”

Do get a 15-year mortgage.

“You should also be able to make a 20 percent down payment. If you need a 30-year mortgage and you can’t put 20 percent down, choose a smaller, cheaper home.” Aside from saving a fortune in interest, with a 15-year mortgage and 20 percent down, you’ll get a good rate.

Don’t stress about your credit score.

“FICO scores are overrated. Having 20 percent down, having a job, and having a record of making steady, on-time payments on loans, bills, and rent eliminates the need for an extraordinary credit score. This is what lenders are looking at.”

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What Retirement Planning Should Look Like in Your 40s

“You stop seeing the big salary increases you received in your 20s and 30s. Now is the time to consolidate—to embrace your current lifestyle and the stuff you already have. It's not the time for aspirational buying.”

Do prioritize your mortgage.

“Paying off your mortgage is a form of saving. Put this before any extra expenditure, like a vacation or dining out. I even think you should pay off your house before putting money in a 529 plan for your children. Each dollar less you pay to a bank is a dollar you can put toward wealth accumulation.”

Don’t get seduced by a brand-name college.

“It’s unrealistic for fami­lies to save $400,000 for a private-school educa­tion and save for their retirement. I’m not going to pretend that that's possible. Prepare your child (and yourself) to choose a college based on cost. Fall in love with your state school. Help your child understand the money your family can save by choosing a school that offers a good educa­tion for a low price.”

What Retirement Planning Should Look Like in Your 50s

“The most important thing you can do is get on an exercise regimen, because that will save you health-care costs in your 60s and 70s. Eat right and take care of yourself. Investing in your health is investing in your retirement security.”

Do take a reality check.

“If you haven’t been saving throughout your career, you need to start saving 50 percent now. That means you’re going to have to go cold turkey on spending.”

Don’t get bumped out of the labor market.

“This is a particularly important time to improve your work skills, because if you lose your job, you’re going to face age dis­crim­ination. Bite the bullet and become computer- and social media-literate. Make sure your people skills are good, because your technical skills are probably going to be a bit behind.”

What Retirement Planning Should Look Like in Your 60s

“Use your 401(k) to delay collecting Social Security until age 70, if you can. That’s when the government pays the maximum benefit. If you can wait until age 70, your monthly Social Security benefit will be 76 percent higher than it would have been if you'd started collecting at age 62—for the rest of your life. You can’t get that kind of deal anywhere!”

Do look out for financial scams.

“Many focus on people over the age of 65. Beware of solicitations for charitable giving or supplemental Medi­care coverage.” (If you have questions about extra coverage, a reliable source is

Don’t keep giving hand­outs.

“Your kids stop getting money when you’re in your 60s. The music stops, so to speak. Whatever chair they sat in, that’s where they sit.”