How to Build a Strong Retirement Plan at Any Age
When it comes to building wealth and preparing for retirement, it can be tough to know where you stand—or where to even begin. I recently took a deep dive into Vanguard’s latest How America Saves report, and I was both encouraged and alarmed by what I found.
Let’s start with the numbers. The median 401(k) balances in America tell an interesting story. Under 25? You’re looking at a $3,000 median balance. Ages 25–34? About $15,000. By the time people hit 55–64, that median rises to $88,000. But keep in mind: median means middle-of-the-pack—not average. A few outliers with millions can skew averages, so the median gives a better picture of where most folks really are.
Now, I don’t share these numbers to make anyone feel behind. Quite the opposite. I want you to see these as reference points, not goals. Because your retirement plan needs to fit your life, your income, and your dreams—not someone else’s.
My Go-To Strategies for Growing Retirement Savings
Here’s what I recommend: Start as early as you can, stay consistent, and let time and compound interest do the heavy lifting. Use tax-advantaged accounts like 401(k)s, traditional or Roth depending on your situation, and never leave an employer match on the table. That’s free money—take it!
One small change I love? Increase your contribution rate by just 1% each year. Over time, that can push you closer to the ideal target of saving 15–20% of your income for retirement.
Saving Benchmarks to Guide You
There are some general benchmarks I keep in mind to check my progress:
- By age 30: 1x your income saved
- By 40: 3x
- By 50: 6x
- By retirement: 8–10x
But again, these aren’t one-size-fits-all. If you’re planning to retire early, or your income jumps dramatically later in life, your path might look different. And that’s perfectly okay.
What the Generations Are Saving
I found it fascinating that Gen Z is saving about 7.2% of their income, Millennials about 8.6%, Gen X 10.2%, and Boomers 11.8%. And when you factor in employer contributions, many are hitting that 10–15% sweet spot recommended by financial planners. That’s good news—it means we’re moving in the right direction.
Don’t Make These Common 401(k) Mistakes
One of the biggest mistakes I see is people cashing out their 401(k)s when they change jobs. Nearly 41% of employees do this, and 85% of them take the entire balance. That’s a huge hit—not just in penalties and taxes, but in long-term growth.
If you’re changing jobs, consider rolling your 401(k) into your new employer’s plan or into an IRA. And whatever you do, don’t time the market or jump in and out based on headlines. Stay invested. Stay the course.
Max Out Your Contributions (If You Can)
If you’ve got the budget for it, 2025 contribution limits are generous: $23,500 for most people, and $34,250 for those aged 60–63. If you’re over 50, you also qualify for catch-up contributions. Every dollar counts, especially if you’ve got some ground to make up.
You can also build multiple income streams to reduce reliance on any one source. And don’t overlook the value of Roth accounts for tax-free withdrawals, or HSAs for future medical costs.
Play the Long Game
If there’s one thing I want you to take away, it’s this: consistency wins. Whether you’re 25 or 55, what matters most is making saving a habit and letting your money grow over time.
In your 40s and 50s, assess your progress. Adjust if needed. In your 50s and 60s, finalize your withdrawal strategy and tax plan. Don’t wait until retirement hits you—prepare for it on your terms.
Final Thoughts
Retirement isn’t just about stopping work—it’s about freedom. It’s about having choices. And I truly believe that with the right strategy, anyone can get there.
So start where you are. Save what you can. And increase it over time. I’d love to hear your thoughts—how are you preparing for retirement? Let’s keep the conversation going.
All writings are for educational and entertainment purposes only and does not provide investment or financial advice of any kind.
