Graduating from college is the end of a long road and the chance to finally start chasing your dreams. Unfortunately, the newfound freedom that comes with being a recent grad can have some downsides, especially when it comes to planning for the future at the expense of the present. Too many people in their 20s simply don’t know the first thing about retirement planning or smart spending, and it’s because they’re too focused on earning money now to think about what they’ll need later. If you’re in that boat, don’t worry: it’s not too late to change course. With a few tips, you’ll be able to start planning for the day when you won’t have to work any more.

1. Start immediately: This is the most important thing to know, and the one that will jump-start the others. It’s never, ever too late to start saving retirement, but the sonner you start, the better off you’ll be. Every year you’re able to save money for the future is invaluable when you consider the interest you could earn. For instance, if you assume an 8% annual return, saving $3,000 a year in a tax-deferred account from the ages of 25 to 35 — without saving any more — will yield $472,000 by the time you’re 65. However, if you start saving at 35 and save $3,000 a year for 30 years, you’ll only have $367,000. One plan turns $30,000 into $472,000; the other turns $90,000 into $367,000. You don’t have to be an accounting major to see how drastically you can improve your output with less input if you just start saving sooner. Do it right away.
2. Calculate your needs: Deciding to start saving is a great step. Now you need to figure out how much you’ll need to save. One of the best ways to start filling in the details is to use a retirement calculator. There are plenty available for free online, and you can also chat with a banker for in-person help. A retirement calculator is just what it sounds like: a tool that looks at how much money you earn now, how much you might theoretically need when you retire, and what steps you can take to bridge the gap. This will let you see just what needs to be done.
3. Contribute to your 401(k): If your employer offers a 401(k) plan, contribute as much as possible. This is one of the best ways to make sure your money works for you and your future, and since it’s taken out of your check before you get paid, you won’t even miss it. What’s more, many employers participate in a contribution-matching program in which they’ll match your 401(k) contributions up to a certain amount. This is just what it sounds like: free money for retirement.
4. Invest in an IRA: An individual retirement account, or IRA, is another essential way to plan for your future, and it’s something that a lot of young workers simply ignore. Investing in a 401(k) is great, but supporting that with an IRA is even better. There are two types: a traditional IRA, which lets you count your contributions as tax-deductible but will charge tax on withdrawals, and a Roth IRA, in which you still pay tax on your contributions so you don’t have to pay them when you withdraw the money upon retirement. They both have pros and cons, so talk with an advisor to see which one fits your needs. The bottom line, though, is that you should start one as soon as possible.
5. Don’t overlook traditional savings accounts: Not all of your retirement planning has to deal with investing; it’s also a good idea to get a regular old savings account at your bank. This is where you can sock away cash for the indefinite future but still be able to access it in emergencies without paying the penalty fees that come with making early withdrawals from IRAs and 401(k)s. Your best bet is to take 10 percent of your pay and save it. You won’t miss it when it’s gone, and you’ll be thankful it’s there when you need it.
6. Reduce debts: It’s impossible to underscore just how important this is when it comes to financial security and ensuring that your retirement is as good as you can make it. Debts — whether it’s credit card debt, student loans, personal loans, or more — are absolute killers of financial freedom. You’re locked into making payments that can cripple your ability to save for the future, and you’ll be so focused on your present debt that you won’t think retirement is a priority. Pay off your debts as soon as possible; if the amounts are more than you can handle, consider attacking them with the snowball method or by working with a debt counselor.
7. Leave your savings alone: Even for young workers who’ve started saving early, the temptation to dip into retirement savings early can be a strong one. Here’s the bottom line: don’t do it. Even in an emergency situation, you shouldn’t cut into your retirement savings, and it’s especially bad to do so if you’re just looking to supplement your income or buy something like new furniture. For starters, you’ll probably pay a hefty fee for early withdrawal, as well as tax on the amount, so you’ll get less than whatever you think you’re getting. The worst part, though, is that taking money out now robs you of decades of accrued interest on the principal. You are robbing your future self for little present gain. When you’re money’s saved, it’s saved. Period.
8. Things change: If you’re 25 and you save for retirement, you’re smart. If you make it to 35 without re-examining your savings plans, you’re crazy. Here’s why: things change over time, and your retirement plans will need to be adjusted based on factors like the size of your family, the level of your income, and a myriad of different needs you just don’t know about yet. Your retirement portfolio will likely start out geared more toward stocks, but as you get closer to retirement, it will transition to less risky investments. The more you pay attention to your retirement plan, the better you’ll be able to weather changes in the economy and survive when you’re no longer working.
9. Be realistic: One of the best ways to start out on the right path for retirement planning is to make realistic, accurate predictions for what you’ll need to have when you retire. Whatever amount of money you think you’ll need is probably slightly less than the actual figure, so when you’re planning, boost the total and aim for a higher sum. It’s possible that retirement saving might not be able to get you to the higher amount, but knowing that means you can start making other plans, including other investments or looking for additional income. If your estimated necessary amount isn’t right, it can wreck everything else.
10. Know your budget: A key lesson that’s popped up again and again on this list is that retirement planning depends on maximizing your contributions to the savings funds you’ll need when you’re older. To do that, you need to spend smartly when you’re younger. Take a hard look at your monthly expenses: What’s being wasted? What could be trimmed? Start from scratch and plan to pay yourself first by setting aside fixed amounts for retirement and savings, then build up by accounting for bills, food, and necessities before getting to luxury items like discretionary spending. Living within your means is the easiest way to make sure you can enjoy a comfortable retirement. It may seem like it’s far away, but trust me, it’ll be here sooner than you think.