11 Tips Millennials Should Start Now for a Successful Retirement
Category: Financial and taxes in retirement
What are the best millennial retirement planning tips?
The best millennial retirement planning tips focus on starting early, maximizing tax-advantaged accounts like 401(k)s and IRAs, controlling spending, building multiple income streams, and planning for healthcare, housing, and lifestyle in retirement.
Why retirement planning matters for millennials
If you’re a millennial, retirement might feel far off—but it’s closer than you think. The oldest millennials are already in their mid-40s, meaning retirement planning is no longer optional.
Gen Z and Millennials are often more engaged with investing, financial independence, and long-term planning than older generations like baby boomers and those in Gen X. But challenges like rising living costs, the disappearance of fixed pensions, uncertain Social Security benefits, and longer lifespans make smart planning essential. In case you are as confused as I am by this alphabet soup: baby boomers were born 1946-1964, Gen X 1965-1980, Millennials (Gen Y, 1981-1996), and Gen Z 1997-2012.
When The New York Times asked readers for their best retirement advice, hundreds responded. Here are what we think are the most valuable insights—combined with wisdom from TopRetirements’s Members.
1. Start saving early to maximize compound growth
The earlier you start saving, the more time your money has to grow, thanks to the power of compounding. Even small contributions today can turn into significant wealth over time. Set a percentage of your income as a goal, and stick with it. FInd more retirement fnancial and tax tips in our Blog.
2. Max out your 401(k) and retirement accounts
Employer-sponsored plans like a 401(k), along with IRAs, are the backbone of retirement savings. Always contribute enough to get the full employer match—it’s free money. Your 401(k) and any IRAs are going to be the biggest source of what you will be living on.
3. Prioritize your future over competing financial demands
It’s easy to put others first—family, children, or parents—but your retirement needs to remain a priority. See our Family section for more.
4. Set a clear retirement savings goal
Define what your retirement lifestyle looks like, then estimate how much you’ll need to support it. Use financial tools or advisors to map your plan. Mutual fund companies have all kinds of great calculators to help.
5. Live within your means and avoid lifestyle creep
Spending discipline is critical. Pay off credit cards monthly, stick to a budget, and separate needs from wants. Just how many video subscription services do you need at any one moment?
6. Build multiple income streams for retirement
Side businesses, rental properties, or passive income sources can diversify your income and accelerate wealth building. They can also offer significant tax savings.
7. Plan ahead for Social Security uncertainty
Future benefits may be reduced as the Social Security Trust Funds run out, maybe as early as 2033. Stay informed and be strategic about when to claim benefits. Many people claim as soon as they are eligible, but some experts advise waiting until age 70 to maximize benefits. Before you decide, make it a thoughtful choice. See the Social Security section in our Blog for more.
8. Start thinking now about where you’ll retire
Cost of living, taxes, healthcare, lifestyle – even politics – all matter. There are so many choices and types of places to retire- urban vs. small town, college town vs. active or 55+ communities, etc. Use your travel and vacation trips to identify and check out ideal retirement locations. See Best Places to Retire for more ideas.
9. Develop a retirement identity beyond your career
Many people, particularly men, struggle after leaving the workforce. Build hobbies, interests, and social connections before you retire. You can only rearrange the garage so many times.
10. Get your body ready for the long haul
The best laid retirement plans are ruined when health care problems cut life short or limit activities. A healthy lifestyle ensures you can actually enjoy retirement. Exercise, diet, and preventative care all matter.
11. Create a simple estate and legacy plan
Decide what you want to leave behind—and how you want your assets distributed. Leave it to children, charities, or spend your last dollar at the undertakers? Even a basic plan makes a difference.
Bonus: How much should millennials save for retirement?
A common rule of thumb is to save:
- 1x your salary by age 30
- 3x by age 40
- 6x by age 50
Another standard rule. If you spend 4% of your retirement savings per year you probably won’t outlive your money. But is that enough to maintain your lifestyle.
However, your exact number depends on lifestyle, location, and retirement goals.
Bottom line:
Invest some time now thinking about your retirement. Even though millennial retirements are 20 or more years away, there is a big payoff in early planning.
Comments: Please share your best tips and comments below.
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Comments on "11 Tips Millennials Should Start Now for a Successful Retirement"
Chris says:
Thanks for this. I would add 2 more:
When you do retire, don't wait - live your dream life. Illness or death comes unexpectedly, make sure you generate your memories while you can.
And, put as much of your 401(k) money as you can into a Roth, instead of the regular 401(k). The long term tax savings will be significant. Roth money is not subject to RMDs or taxation, even for your heirs. I wish someone had advised me about that.
Mike says:
From the IRS: Withdrawals from Roth IRAs and Designated Roth accounts (401(k) or 403(b)) are not required until after the death of the account owner. However, beneficiaries of Roth IRAs and Designated Roth accounts are subject to RMD rules.
https://www.irs.gov/retirement-plans/retirement-plan-and-ira-required-minimum-distributions-faqs
The SECURE Act of 2019 makes the RMD payout happen in 10 years where it had previously been over the lifetime of the heir which could make a huge difference in tax rates. The only exceptions are for a spousal beneficiaries who can roll it over into their own Roth IRA, minor children, disabled individuals and those not more that 10 years younger than the owner.