I am at Least 20 Years from Retiring; How Should I Plan?

If you are at least 20 years from retiring, it may seem daunting, but early and strategic planning can ensure financial security and allow you to enjoy life both now and in retirement. Here are essential strategies to help those who are at least 20 years away from retirement prepare effectively without sacrificing their current lifestyle.

Start Saving Early

One of the foundational steps in retirement planning is to start saving early. Even amidst the challenges of paying off student debt or managing initial living expenses, it’s crucial to adopt a disciplined approach to savings. Aim to save at least 5% of your income for retirement and an additional 5% towards building an emergency fund until you have secured six months’ worth of living expenses. Once your emergency fund is established, boost your retirement savings to at least 10% of your gross income. This early start leverages the power of compound interest, significantly impacting your savings growth over time.

Maximize Tax-Deferred Savings

Take full advantage of tax-deferred savings accounts such as 401(k)s, which may be offered by your employer, or establish an Individual Retirement Account (IRA). These accounts benefit from tax-deferred growth, meaning you don’t pay taxes on the earnings until you withdraw them in retirement, allowing your investments to grow more quickly.

Emphasize Growth in Your Investments

Given the long time horizon until retirement, adopt a growth-oriented investment strategy. Historically, equities have provided higher returns over the long term compared to other asset classes, though they come with higher volatility. At this stage, you can afford to take on more risk in exchange for potentially higher returns. Remember, the goal is to build a sizable retirement fund, and equities could be a key component of achieving that.

Ensure Adequate Insurance Coverage

Insurance is a critical element of financial planning that is often overlooked. Ensure you have sufficient disability insurance—either through your employer or a private policy. This type of insurance is essential as it protects your income in the event you are unable to work due to illness or injury, safeguarding your financial plans and preventing dependency on others.

Live While Saving

It’s important to strike a balance between saving for the future and enjoying your present life. Setting aside funds for retirement doesn’t mean you must forego all current pleasures like vacations, a new car, or other personal goals. Budget for these expenditures mindfully, ensuring they don’t compromise your long-term savings plans.

Regular Reviews and Adjustments

As your life circumstances and the economic environment change, so should your retirement plan. Regularly review and adjust your savings goals, investment choices, and risk tolerance. This might mean increasing your savings rate as your income grows or shifting your investment strategy as you draw closer to retirement.


For those 20 years away from retirement, now is the time to lay a robust financial foundation. By starting early, investing wisely, and ensuring adequate protection through insurance, you can secure your financial future while still enjoying your current lifestyle. Remember, the most crucial step is to start—because the earlier you begin, the easier it will be to build the necessary funds for a comfortable retirement. Consulting with a Fee-Only financial adviser can also provide personalized guidance to help tailor a retirement strategy to your unique financial situation and goals.

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