Why starting at 23 beats starting at 33
Retirement feels far away at 23, and there's always something more urgent: rent, loans, a car. But the first ten years of saving do more for you at 65 than any other ten. The reason is simple: money saved early has the longest to grow.
Start contributing to your 401(k) or 403(b) with your first paycheck, at least enough to get the full employer match, and let it grow. Waiting ten years doesn't cost ten years of saving; it costs those ten years plus everything they would have grown into over the next three or four decades. On the example household below, waiting from 23 to 33 leaves much less at 65.
Why the early years matter most
A dollar invested at 23 has 42 years to grow before 65; a dollar invested at 33 has 32. At a modest real return, the first dollar grows to roughly twice what the second does. The early dollars are also the easiest to save: you never get used to spending them, and the match adds to every one.
- Take the match first. An employer match is an instant return on what you put in. Contribute at least enough to get all of it, before anything else.
- Keep an emergency fund. A few months of expenses in cash keeps a surprise bill from becoming credit-card debt or an early withdrawal.
- Raise your rate with your pay. Each raise is a chance to save a point or two more without feeling it.
- An HSA, if you have one. Money goes in before tax, grows, and comes out tax-free for medical costs, at any age.
On an example household
Here's one of the app's sample households: a 23-year-old in a first job, saving 6% with a 3% match, with a small Roth IRA and an emergency fund. The same model, with that paycheck saving starting later:
Just out of school with a first salary, a 6% 401(k) contribution and a 3% match, a small Roth IRA and an emergency fund. Shows what four decades of compounding does.
| Paycheck saving (401(k), match, HSA) | Saved by 65 | Compared with now |
|---|---|---|
| Start saving at 23 (now) | $1.47M | — |
| Start saving at 28 | $1.06M | −$411k |
| Start saving at 33 | $751k | −$716k |
| Start saving at 43 | $366k | −$1.10M |
Waiting ten years, from 23 to 33, leaves $716k less at 65: $751k instead of $1.47M.
Total savings at 65 in today's dollars, from the model's assumed returns. Each row is the same model with every paycheck's retirement saving (401(k) deferrals, the employer match and HSA contributions) starting that many years later; salary, spending and everything else stay the same. Sample household with made-up figures; an illustration, not a forecast or advice.
Roth or pre-tax?
Many plans let you choose: pre-tax contributions lower your tax now, and you pay tax when you withdraw in retirement; Roth contributions are taxed now and come out tax-free later. Early in a career, when your tax rate is low, Roth often makes sense, but the answer depends on your income path, where you'll live, and what you'll leave. The same household, with its contributions all one kind or split:
| 401(k) contributions | Lifetime costs | Left to heirs | Left to heirs after costs |
|---|---|---|---|
| As entered (pre-tax) | $2.12M | $2.72M | $595k |
| Half pre-tax, half Roth | $1.52M | $5.76M | $4.24M |
| All Rothbest here | $1.24M | $9.08M | $7.84M |
The same paychecks with the 401(k) deferrals moved to one kind; the match and the amount saved stay the same. Lifetime costs are federal, state, NIIT, IRMAA, Medicare, ACA and estate costs over the whole model, in today's dollars; "left to heirs" is the estate after taxes. The Employment Income page in the app shows this comparison on your own paychecks. An illustration, not advice.
Free for students
If you're a student at a college, university or community college, Corvana Studio's student plan gives you everything in Deluxe free while you're in school. Model your first job, your 401(k) match, a Roth IRA, student loans, or a child's Trump Account, and see what starting now is worth on your own numbers.
Check your own numbers
Enter your paycheck, accounts and age and see every year, in your browser with no account. Students get the full app free.
This guide is general education, not tax, investment or legal advice, and the figures above come from a sample household with made-up numbers and assumed returns. Returns aren't guaranteed, tax rules change, and your situation may differ.