Retirement at 22 — Why Starting Now Beats Earning More Later
This is the one financial topic where being young and underpaid is an advantage, and it's worth understanding exactly why before dismissing it.
Compound growth is a function of time more than amount. Money invested in your early twenties has decades to grow, which means small contributions now can outrun much larger ones started later.
That's the entire pitch. You will never again have as much of the thing that matters most.
Your reality
The parts of this topic that hit your trade differently — and that generic advice skips.
Time does more work than the contribution amount
A modest monthly amount started now, left alone, generally ends up ahead of a much larger amount started a decade from now. It's the one financial advantage that can't be bought back later at any price.
A low tax bracket is a Roth advantage
Roth contributions are taxed now and come out tax-free in retirement. Paying that tax at an entry-level income — likely the lowest bracket of your career — is precisely when that trade works best.
The first job's match is free compensation
If your employer matches contributions and you don't contribute enough to capture it, you're declining part of your pay every period. It's the highest-return money available to anyone, at any age.
First moves
Three concrete steps, in order. Each one is a brick laid.
Take the full match from your first paycheck
When you start a job, find the match formula and set your contribution to capture all of it immediately. Doing it before you get used to the take-home means you never feel the difference.
Open a Roth IRA with whatever you can automate
You need earned income to contribute, and part-time or summer work counts. The amount matters far less than starting — automate something small and let the years do the work.
Put it in a target-date fund and stop touching it
A single fund matched to roughly when you'd retire handles the mix for you and rebalances over time. At this stage, boring and automatic beats clever every time.
Frequently asked questions
I barely make anything. Is it worth starting?
Yes, and this is the rare case where the small amount is the point. Because growth compounds over decades, contributions made in your early twenties do disproportionate work. Start with an amount you won't notice, and raise it whenever your income rises.
Roth or traditional at my income?
At an entry-level income you're likely in one of the lowest brackets you'll ever be in, which is the textbook case for Roth — pay the tax now while it's cheap, withdraw tax-free later. Confirm with a preparer, but that's the usual answer at this stage.
Should I pay off student loans before investing?
Capture any employer match first — that immediate return generally beats the interest rate on your loans. After that, high-interest debt usually comes before extra investing, while low-rate federal loans can reasonably run alongside it.
See where your foundation stands — and what to build next.
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