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My Biggest Financial Mistake – Missing Retirement Contributions In My 20s

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According to Business Insider, only 45% of Millennials have opened a retirement account, and 12% have stopped contributing

I’m embarrassed to say that for half of my 20s, I was among the 12%. 

In this piece, I’m going to share why I stopped contributing to my retirement account, why it was a huge mistake, and thankfully, how easy it was to get back on track. 

Why I stopped contributing to my retirement account

When I started my corporate job at 22, I remember someone from accounting asking me if I’d like to open a 401(k) and set up maximum contributions. I said sure and went to lunch. 

I didn’t think about retirement again for seven years. 

Now, that wouldn’t have been much of a problem if I’d stayed at that job, but I didn’t. After three years, I quit that job to travel the world and recoup some of the mental health one tends to hemorrhage as a young project manager. 

Having filled two passports with stamps, I settled back in Atlanta, published a book, and began fishing for income streams. 

Money was scarce during this time of my life so I coveted my checking account like Gollum. When friends invited me out to expensive restaurants, it felt like they were tugging on The One Ring. MY PRECIOUS, I’d hiss, making miserly excuses. 

When I finally started making real money the pendulum swung the other way. Rather than save for retirement, I treated myself to a faster laptop, a 4K TV, and even a second car (although it was the cheapest of the three). 

By 28, I knew I absolutely should be saving for retirement, but I found comfort in a phrase many young people tell themselves: 

Ehh, I’ll start saving for retirement once I start making real money. 

First, and as I’ll explain below, contributing to retirement is making real money. No matter what income bracket you’re in, contributing to a retirement account is always a win, and by contrast, missing contributions is a costly mistake. I wish that my younger self would have looked into companies like blooom, which can help you manage your retirement accounts, eliminating the stress of doing it all on your own. 

Why missing retirement contributions was a huge mistake

Retirement accounts are vastly different from regular savings accounts. Because they have time to “mature,” i.e. accumulate interest without withdrawals, they can offer much higher rates of return. 

A regular savings account might have an APY of 1% compounded annually. That means that if you put $1,000 in a savings account at 25, at age 65 you’ll have $1,488.86. 

However, retirement accounts can have APYs ranging from 7% to 10%. So if you put $1,000 in a Roth IRA with an APY of just 7% at age 25, at age 65 you’ll have $14,974.46. 

Here’s why I’m glad I snapped out of it and resumed contributions before my 20s ended. The following table shows what happens to a contribution of just $1,000 at different stages of your life:

Age when you deposit $1,000 into retirement Amount you’ll have at 65 with 7% APY
25 $14,974.46
35 $7,612.26
45 $3,869.68

In basic terms, a dollar invested in your 20s becomes $15 by the time you retire. But $1 invested in your 30s becomes half as valuable by retirement, and by your 40s, a quarter as valuable. 

So let’s revisit that fallacy I found false comfort in:

I’ll start contributing to retirement once I start making real money. 

Well, the numbers don’t lie; it’s much, much easier to save for retirement as a broke 20-something than a well-off 30-something or even a rich 40-something.

This year, just shy of my 30s, I’ll max out my Roth IRA contribution. It won’t quite make up for the missed contributions in my 20s, but I’ll still be fine, and you will too. 

My #1 tip for getting back on track with retirement savings

My Biggest Financial Mistake - Missing Retirement Contributions In My 20s - My #1 tip for getting back on track with retirement savings

I want to share with you my personal #1 tip for saving for retirement: set up automatic payments. 

Most financial advisors, human or AI, will let you set up automatic withdrawals from your checking account into your retirement account. Start at $50 per month, and increase it to $200 as soon as you can afford it. 

When I quit my job, if I’d only taken 15 minutes to set up automatic payments to my IRA, I’d be tens of thousands richer in 40 years. Don’t make my mistake!

If you’re tight on money right now, sign up for a free trial of a money management software like Money Patrol. Use it to identify ways to save money (like old subscriptions) and toss the savings into your monthly retirement contributions. 

Another great way to save for retirement is by splitting your subscriptions with friends and family. If you split the cost of HBO Max, Costco, Netflix, Hulu, or Spotify with just one other person you can save hundreds annually and toss it right into retirement. 


Every $1 saved at 25 becomes $15 at 65. But that window closes quickly, so be sure not to miss it. 

Don’t make the same mistake I did, which probably cost me tens of thousands in lost interest. Use MU30’s guide to set up a retirement account if you haven’t already, and set up automatic withdrawals from your checking account. 

A retirement account not only makes you gobs of money while you sleep; it’s a massive stress reliever. When I finally blew the cobwebs off of my retirement account and set up modest contributions, I felt a massive weight fall off my shoulders that I didn’t even realize I’d been carrying. 

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