When you’re early in your career, planning for retirement can feel like aiming at a moving target. Your income, lifestyle and goals are still taking shape, and the saving and investing options can seem overwhelming. Yet the flexibility and time you have now are great advantages, and the choices you make today can have a substantial impact on your future financial well-being.
Starting early means setting the stage now for the life you want to enjoy later. When you make retirement planning part of your broader career growth, you create more options and confidence as your goals evolve.
The value of getting started early
Even modest contributions today can amount to significant savings over decades. Compounding—the reinvestment of earnings—turns time into a powerful ally. For example, saving $500 a month starting at age 25, and assuming a 7% annual return, would grow your savings to about $1,312,407 by age 65. Wait 10 years and you’d need to save roughly twice as much—about $1,076 per month—to reach the same total.*
Beyond the math, early investing helps build financial habits that stick. Automatic contributions to employer retirement plans or IRAs make saving second nature, and as your income grows, increasing those contributions over time can turn steady effort into meaningful progress.
Keeping your strategy flexible
Which type of retirement account should you start with? Career transitions, relocations, changing goals or a growing family may all lie ahead, each affecting how you save and spend. That’s why flexibility matters more than precision early in your career: it helps you stay prepared so opportunities or surprises don’t derail your long-term goals.
If your employer offers a 401(k) or similar plan, that’s often the best place to begin—especially if there’s a match, which is essentially free money that accelerates savings. After contributing enough to capture the full match, consider adding an IRA for additional tax benefits. Traditional IRAs offer tax-deferred growth, while Roth IRAs can provide tax-free qualified withdrawals in retirement when specific IRS conditions are met, such as holding the account for at least five years and reaching age 59½.
A taxable brokerage account can complement these options; while not tax-advantaged, they can provide liquidity for short-term goals like buying a home or starting a business.
Health savings accounts (HSAs) also deserve consideration—their triple tax advantages make them an effective tool for both healthcare needs and long-term planning when withdrawals are used for qualified medical expenses. The contributions you make are tax-deductible or pre-tax, investment growth is tax-free and withdrawals for qualified medical expenses are also tax-free. HSA funds can also be used for non-medical expenses in retirement after age 65 without penalty, though such withdrawals are subject to ordinary income tax.
As your career progresses, compensation may expand beyond salary. Equity-based incentives—such as stock options or restricted stock units (RSUs)—can be powerful tools for building long-term wealth and diversifying your income. Managing these benefits strategically can help you balance near-term cash flow with future growth opportunities.
Together, these accounts and benefits form a balanced framework that blends tax efficiency, liquidity and growth potential, giving you the flexibility to adapt as your goals evolve.
Tax diversification as a planning tool
Future tax rates are uncertain but having both pre-tax and post-tax assets allows you to manage distributions strategically. By drawing from different account types, you can shape your income in retirement to align with your tax bracket and adapt as market conditions and spending needs change.
For example, you might draw from a traditional IRA to remain within a targeted tax bracket, then supplement that income with tax-free qualified Roth withdrawals. That flexibility becomes especially valuable when required minimum distributions begin—typically at age 731—or when coordinating income with Social Security or Medicare eligibility thresholds.
Adjusting as you grow
Retirement planning isn’t a set-it-and-forget-it exercise. As your career advances or family dynamics shift, so should your plan. Revisit contribution levels, insurance needs and investment allocations regularly. If your employer offers new benefits, such as a Roth 401(k) option or student loan repayment assistance, consider how they might fit into your broader financial strategy. Over time, these adjustments can help ensure your plan continues to reflect your goals.
Ultimately, early-career planning is less about locking into a single roadmap and more about building a foundation that adapts as you do. A wealth advisor can help you explore strategies that align with your goals and circumstances, so you can make the most of your flexibility today as you work toward financial freedom tomorrow.
1 Retirement topics – Required minimum distributions (RMDs)
* This hypothetical example is for illustrative purposes only and is not intended to be representative of actual results or any specific investment, which will fluctuate in value. The determinations made by this example are not guarantees or projections, and no taxes or fees/expenses are included in the calculations, which would reduce the figures shown. Please keep in mind that it is possible to lose money by investing, and actual results will vary.
This material is provided for informational and educational purposes only. It does not consider any individual or personal financial, legal, or tax circumstances. As such, the information contained herein is not intended and should not be construed as individualized advice or recommendation of any kind. Where specific advice is necessary or appropriate, individuals should contact their professional tax, legal, and investment advisors or other professionals regarding their circumstances and needs.
Any opinion expressed herein is subject to change without notice. The information provided herein is believed to be reliable, but we do not guarantee accuracy, timeliness, or completeness. It is provided “as is” without any express or implied warranties.
There is no assurance that any investment, plan, or strategy will be successful. Investing involves risk, including the possible loss of principal. Past performance does not guarantee future results, and nothing herein should be interpreted as an indication of future performance.
Certain account types and tax benefits discussed—such as Roth IRAs and Health Savings Accounts (HSAs)—are subject to specific eligibility requirements, contribution limits, and withdrawal rules. For example, Roth IRA earnings may be tax- and penalty-free only if certain conditions are met, including a minimum holding period and qualifying distributions after age 59½. HSA withdrawals are tax-free only when used for qualified medical expenses; non-qualified withdrawals may be taxable and, if taken before age 65, subject to an additional penalty.
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