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The Peoples Bank

It’s Never Too Early to Start Saving for Retirement – Even in Your 20s


Just as you planned and prepared for life after college, even if you are right out of college, it’s a good idea to look beyond your first job and begin saving for retirement. Yes, there is some irony in thinking about retirement when you may have just started the first job of your professional career, but there is no better time to open a retirement savings account and get into the habit of saving than when you are young.

The primary advantage you have on your side to maximize the power of compound interest is time. With your whole career ahead of you, every little bit you save now can turn into big rewards later. Another factor working in your favor at a young age is that you may not have a monthly mortgage or a family to support quite yet, which makes saving even easier.

Here are three tips to get the most out of retirement savings while you’re young. 

1. The Sooner You Start, the Better

There are many reasons why young people typically avoid saving money early on in their careers. First, early career jobs may come with lower pay. Paying rent and student loans can be a lot to cover. You could miss a golden opportunity if you allow these issues to become excuses to bypass retirement planning. Putting off a 401(k) plan or avoiding saving from your overall budget may cause regret later.

Here’s an example on the importance of starting earlier rather than later. If you are 25 and set aside $3,000 a year in a tax-deferred retirement account for 10 years, your $30,000 investment will have grown to more than $338,000 by the time you are 65, assuming a seven percent annual return. If you save $3,000 a year for 30 years starting at age 35, your $90,000 investment will grow to about $303,000 by the time you are 65 which is a drastic difference.

2. Take Advantage of Your Employer’s 401(k) or Start Your Own IRA

If your employer offers a 401(k) plan, sign up for it immediately. A lot of employers will match your contributions up to a certain percentage or amount, and nobody dislikes free money. Once you sign up, the money will automatically be pulled from your checks before it’s taxed so your savings will grow tax free and compound at a faster rate over time. It almost sounds too good to be true. But if your employer doesn’t have a 401(k), you can still start your own retirement fund that defers taxes. Our advisors can help you with this step if needed. 

3. Find the Right Medium

Although putting aside the maximum allowed in your retirement plan is great, you may find that it is taking too big of a chunk out of your paychecks. One way to combat this issue is to gradually increase your contributions over time. You can always look to add one percent whenever you feel you can do without it now, which will not make too much of a difference to your paycheck and will grow significantly over time with compounding.

Another way to find the funds for retirement saving is to give your plan a raise each time you earn a raise at work. Not only will you start enjoying the raise in money from your paycheck, but you will also reap more benefits down the road through the increased contributions.

If you are interested in opening a retirement account, The Peoples Bank is available to walk you through any questions you may have. We have a Trust and Asset Management Department which is skilled and well-versed in all matters related to saving for retirement.

Give this department a call at 228-435-8208 to set up an appointment or email

Our experienced staff would love to assist you.


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