Planning for Retirement: At 22, You Are Not Too Young! (And You Are Never Too Old)

Kathleen Coxwell

September 23, 2014 • 6 minutes

Saving $2,000 per year towards retirement starting at age 25 instead of age 35 will yield an additional $315,000 at retirement, assuming an 8 percent annual rate of growth.

Retirement Planning — *Hurray for retirement planning – start young and finish big.*

If you or a young adult in your life need any convincing that putting money into retirement savings should be made a priority, Bobby Lee, founder of 2 Minute Finance – a site that offers quick, easy-to-follow videos on a wide range of money management topics – suggests sharing the above statistic that he found on Bankrate. “If that doesn’t open your eyes to the importance of prioritizing saving for retirement, then I don’t know what will,” Lee says .

Lee recently checked in with us to offer his thoughts on how recent college graduates and others entering the workforce should approach saving for their golden years. Here’s what he had to say: Tell us about 2 Minute Finance. Why did you start your site?

2 Minute Finance is an educational blog that teaches personal finance and money-management skills in two-minute videos. I started the blog in 2008 as a resource for my friends who were looking for quick answers to money-management questions.

What sort of information can we find on 2 Minute Finance?

At the core of my blog are videos that fall into the basic categories of personal finance: earning, saving, spending, and investing. However, I have also added an emphasis on breaking down complex business and finance stories, putting them into basic terms that anyone can understand.

What do you think are the biggest myths surrounding retirement among recent college graduates?

There’s a tendency for my peers to view retirement as “that thing I have to deal with eventually, but not right now.” And who can blame us? After all, we have many decades to go before we reach retirement age.

However, like death and taxes, retirement planning needs to be one of those things that we should all buckle down and fully learn about. There really is no sugarcoating the importance of it. The sooner we start saving for retirement, the better off we’ll be when we reach retirement age.

How can people just starting out in their careers (and trying to survive on a leaner paycheck or facing loads of student debt) start saving for retirement?

It doesn’t take a lot to start saving for retirement. Put away what you can, whether that’s $20, $50, or $100 a month. Also, investigate all of your company’s retirement account options, as well as those that you can establish independently.

But one important thing to remember is to fully take advantage of your company’s matching contribution towards your retirement account, if you receive such a benefit. Otherwise, it’s basically free money left on the table.

How do you think people in their 20s and 30s should approach retirement savings? How much should they set aside?

Figuring out how much to set aside for retirement and determining a retirement approach is a personal decision. I suggest doing so in consultation with a retirement or financial planner, if that makes you more comfortable. You can also consult a myriad of new online-only retirement planning resources for ideas.

Frankly, this is a game that you do not want to lose. So play the game with the best approach and strategy you can muster (and afford).

What are your favorite types of investments for people in this age range?

I’m not a registered investment advisor nor a retirement planner, so I can’t advise on specific investments. However, I urge everyone to investigate all of their retirement account and investment options.

It’ll take anywhere from a few hours to a few days to learn about this stuff. But the main key is to get comfortable with the terminology and inner workings of each product, service, and account type.

If you’re not familiar with terms like sales loads, share classes, return on investments, and others, make sure you educate yourself on it. More importantly, if you’re mystified by all of the account options available (along with their future financial and tax implications), pick up the phone and call your retirement planner for clarification.

Do not be afraid to ask questions. As cliché as it sounds, knowledge is power.

More and more retirees are looking for ways to keep working after they’ve retired from their careers or are looking for passive income. Do you think it’s useful for people early on in their working life to diversify their income streams? What are some options out there for people hoping to do this – whether they want side gigs while working full-time or something to do in retirement?

Throughout my entire professional career, I have always juggled a primary job with a secondary gig. It’s not a sign of disinterest in one job over another. Rather, I do it out of personal fulfillment and to hedge my bets in case one income stream goes away. And I think more young adults should do the same.

With the growth of micro jobs, gigs, and the sharing economy, it’s very easy to develop a second income stream, even if you think you don’t have a hobby or craft that could make you money on the side.

After all, the old-fashioned idea of a “job for life” is a relic. You have to advocate for yourself and make sure you’re best positioned to succeed, both now and during retirement.

What are some of your favorite personal finance sites, books, resources (especially geared toward helping young adults plan for their future)?

As stale as it sounds, I look towards the federal government for basics on personal financial management resources. MyMoney.gov does a great job just sticking to the basics, especially involving retirement planning.

I’m also a fan of the resources available through the National Endowment for Financial Education, AARP, and some of the thorough retirement guides on About Money. Separately, I also like some of the retirement calculators, tools, guides, and advice that many brokerage firms put up on their websites.

Finally, if you’re someone who is eligible for a less-than-common retirement plan, like a pension or teacher’s retirement account, please take into consideration the advice offered at workshops held at your workplace and through your retirement planning representative/liaison.

Follow Bobby on Facebook and Twitter .

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