According to the 2018 Millennials and Money Survey by TD Ameritrade, more than half of millennials think they will become millionaires during their lifetime. This might sound unrealistic, considering that the average millennial student loan debt is higher than any other generation. But the truth is that retirement age is on the rise. As a result, millennials have a chance to prioritize earning and saving more throughout their lifetime.

For the millennials featured below, millionaire status is going to be a reality. Here’s how (and why) they are prioritizing retirement savings in their 20’s and 30’s in order to have seven figures saved in their retirement accounts by retirement age.

Best Retirement Plans

When you’re in your 20s and 30s, retirement feels inconceivable. Concepts like life insurance, long-term care, and social security benefits are things you can worry about later.

But the truth is that retirement age is closer than you think. The good news is that the power of compound interest works in your favor when you’re young.

Compound interest is interest that you earn on interest. The longer you keep money invested, the longer you have to earn interest and then earn interest on your interest.

It might sound complicated, but compound interest works like a snowball rolling down a hill — the longer you allow it to roll (or compound) the bigger the snowball becomes.

The same is true for your retirement savings. Of course, loss is possible, but the longer you save, the more likely you are to have a retirement portfolio that can handle potential losses and recover.


For Cali Ann, a 31-year-old from Washington DC, retirement planning in her 20’s and 30’s just made sense.

“I am naturally a planner so it fits my personality and makes me feel in control of my path. I also understand the power of compounding and want to take advantage of any help I can get just from naturally starting earlier,” she says.

But even though she likes to plan, retirement planning still took some effort. In order to make it easier, she didn’t worry about the different types of accounts — Traditional IRA, Roth IRA, SEP IRA, 401(k), or Simple IRA — at least not at first.

Instead, she focused on lowering her monthly budget so she could set aside more money for retirement planning. This would also boost her retirement income.

“I started tracking my spending every month and looking for trends in where I spend more than I thought or where it seems I value spending more than I expected and used that to make my budget.”

“This has meant cutting back on eating out, changing my car insurance, being more creative in gift giving and spending time with friends in a way that costs less…I focused on small changes that really add up but don’t take away from the things in life I value.”

To do: As Cali Ann explains, the most important thing to do is simply start. Whether it’s setting aside $10 per month or $100, what you need to do is begin.

millennial happy with 401k retirement plan

Automate Your Retirement Savings

Life is hectic and that’s why it’s easier to achieve financial goals when the process is automated. Regardless of whether you plan to invest in mutual funds, bonds, or stocks, it’s important to create a saving process that is automatic.

In the same way you automatically pay towards social security every month through your employer, do the same for your retirement accounts.

Allan Liwanag, a 35-year-old in Maryland, wants to make sure that his children never have to worry about him or his wife during retirement. Automating their retirement savings made it easier for him to ensure he was saving enough to achieve his goal.

“I make sure that I put funds towards my investments automatically.  When I get my paycheck, a good portion of the funds have already been taken out and sent to my investment portfolios to be invested.”

“This means that when my wife and I deal with budgeting, the net amount from my paycheck — not including funds taken out for investments — is what we use as the base income.  A lot of people spend first and save what’s left. Unfortunately, when you do that you are prioritizing your expenses over retirement savings. It should be the other way around. When you save first, you’re bound to squeeze the net funds to satisfy your expenses,” says Liwanag.

To do: Set up an automatic transfer to your retirement account. No matter the amount you save each month, automate the process so you don’t leave retirement planning to chance.

Figure Out Your Workplace Benefits

With over 100 million participants, defined contribution retirement plans are exceptionally popular in the United States. Even beyond that, the majority of employers offer retirement plans through work. That’s why it’s important to look at your workplace retirement accounts. If you don’t, you might be missing out on free money.

Logan Allec, a 30-year-old in Santa Clarita, California, decided to prioritize retirement savings while he’s young because of the immense effect time will have on his reinvestment returns.

Allec explains, “Let’s assume that you were you were able to invest $2,000 a year (which is less than $200 a month) from age 25 to age 65 with an average 7% return.  In this scenario, you would have over $450,000 in your account by the time you turned 65. But let’s say you started investing $2,000 a year at age 35 with an average 7% return.  You would have less than $220,000 in your account at age 65.”

Allen’s imaginary example showcases the power of compound interest over time. Starting 10 years earlier makes a $230,000 difference in this case. Because of his focus on savings, Allec made a point of figuring out his workplace retirement benefits as soon as possible. He definitely didn’t want to miss an employer match.

Getting started in the investment world may be as simple as making a phone call to your company’s human resources department and asking if they have a 401(k) plan or similar [retirement account] that you can contribute to.

Some employers even offer to match a certain percentage of retirement contributions made by their employees, so be sure to take advantage of this option if it’s available to you. It’s essentially free money!

To do: Call human resources at your workplace and ask about retirement account options. It only takes five minutes; it might help you save thousands of dollars toward your retirement income.

The Bottom Line

Even if you don’t have access to retirement accounts at work (or if you’re self-employed), there are other ways to maximize retirement account savings. Whether it’s a SEP IRA that you set-up on your own or a Simple IRA through the small business you work for, there is a retirement account for every situation. Starting is the most important, and often the hardest part.