Retirement can feel impossibly far away when someone is 22 or 25. Rent, student loans, daily expenses, and a first full-time paycheck often seem more urgent than saving for a life decades ahead. Financial expert Rachel Cruze says that mindset can create a costly delay.
Cruze, a bestselling author and host associated with Ramsey Solutions, told PEOPLE that one of the biggest financial mistakes people make in their 20s is failing to think about the future when managing their money. Her advice is simple: start early, even if the amount seems small.
Why Time Matters
A young worker does not need to save thousands of dollars each month to begin building a retirement fund. Cruze pointed to $200 a month in a Roth IRA as an example of a manageable starting point.
The reason is compound growth. Money invested early has more years to potentially grow, and the growth can then generate additional growth. A delay of several years can therefore create a much larger gap than the number of missed contributions might suggest.
For example, a 25-year-old who invests $200 each month and earns an assumed 10% annual return could have roughly $1.26 million by age 65. That figure is a projection, not a guaranteed result, because investment returns vary from year to year.
Starting at 22 under the same assumptions would produce roughly $1.7 million by age 65. Starting at 31 would produce about $684,000. The difference comes mainly from giving the money more time to compound.
Roth IRA Basics
A Roth IRA can be useful for long-term retirement savings because contributions are made with after-tax money. Qualified withdrawals can generally be tax-free, subject to IRS rules.
For 2026, the combined annual contribution limit for traditional and Roth IRAs is $7,500 for people under 50. The limit rises to $8,600 for those 50 and older. A $200 monthly contribution equals $2,400 a year, so that example remains well below the annual limit.
Roth IRA eligibility also depends on income. For 2026, the income phase-out range for Roth IRA contributions is $153,000 to $168,000 for single filers and heads of household, and $242,000 to $252,000 for married couples filing jointly.
The main lesson is not that every young worker must invest exactly $200. It is that a small, repeatable contribution can establish the habit while leaving decades for potential growth.
The Retirement Gap
Recent survey data shows why early saving has become a bigger concern.
Thrivent’s 2026 Retirement Expectations Survey found that 47% of non-retirees are skeptical they will ever be able to fully retire. At the same time, 58% said they were confident they would have enough money to retire from their primary career on schedule. The survey included more than 2,000 Americans.
Northwestern Mutual’s 2026 Planning & Progress Study found that Americans believe they need an average of $1.46 million to retire comfortably. That figure rose by $200,000 from the previous year. The study also found that 48% believe it is somewhat or very likely they will outlive their savings.
These figures do not mean every person needs $1.46 million. Retirement costs vary based on housing, health care, lifestyle, location, taxes, and other expenses. The figure does show how Americans’ expectations about retirement security are changing.
Starting Earlier
Northwestern Mutual’s 2026 research also highlights the length of the saving period. Americans currently begin saving for retirement at an average age of 31 and expect to retire around 65.
Gen Z starts earlier, at an average age of 22, and expects to retire at 61, according to the study. That gives younger savers more years for their investments to potentially grow.
John Roberts, executive vice president and chief field officer at Northwestern Mutual, has also pointed to longer retirement periods as a planning issue. Many Americans may spend 30 to 40 years in retirement, which means savings may need to support a lengthy period after full-time work ends.
The earlier a person starts, the more time the savings account has to work before withdrawals begin.
A Small Start Can Matter
Cruze’s message focuses less on chasing a specific dollar amount and more on developing a habit early. She described the goal as taking care of one’s “future self” and encouraged young adults to think about the person they will become later in life.
That idea can be easy to overlook during the first years of adulthood. A $200 contribution may not seem significant next to rent, groceries, transportation, or other bills. Yet repeated contributions over several decades can become substantial when combined with investment growth.
There is also no guarantee that an assumed 10% return will occur. Markets rise and fall, and actual results depend on investment choices, fees, taxes, contribution timing, and market performance.
The Cost of Waiting
Waiting until the 30s or 40s does not make retirement saving impossible. It can, however, reduce the amount of time available for compound growth.
Someone who starts later may need to contribute more money to reach the same target. That can become harder as housing costs, family expenses, debt, and other financial responsibilities increase.
Cruze’s broader point is therefore about timing. The money saved in the early years of a career gets something that later contributions cannot buy back: additional years.
Retirement may feel distant in the 20s, but that distance can be financially useful. Starting with a modest amount, such as $200 a month, gives investments more time to potentially compound.
The 2026 retirement research from Thrivent and Northwestern Mutual also shows that many Americans remain uncertain about whether their savings will last. For young workers, building a consistent saving habit early can provide more time to adjust contributions as income and expenses change.
The advantage of starting young is not a guaranteed retirement balance. It is the extra time available for savings and investment growth to work together.
