How Much Money Should I Have Saved by 21?

If you have saved $7,000 by age 21, you're ahead of many of your peers.

By Christy Bieber – Updated Jan 1, 2026 at 10:19 PM EST

Key Points

Median earnings of 20 to 24-year-olds total $41,392.
Saving 20% of your earnings is a smart financial decision.
The sooner you start saving and investing, the easier it is to build wealth.
The $23,760 Social Security bonus most retirees completely overlook ›

Saving money isn't easy for most 21-year-olds. Even if you're a disciplined saver, you're probably nowhere near your earnings peak.

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An infographic outlining different methods to save money when you're 21 years old. — Image source: The Motley Fool

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Invest to take advantage of compounding

When you're in your early 20s, compound interest and earnings are especially powerful. If you can afford to invest in the stock market at this age, the payoff will likely be huge in retirement. If you invest $5,000 at age 21 and earn 9% annual returns, you'd have more than $220,000 by age 65 — even if you never contributed another cent.

Investing in a Roth individual retirement account (IRA) is a great way to start saving for retirement when you're in your early 20s. You don't get to deduct your contributions from your taxable income, but you can receive money tax-free once you reach age 59 1/2. Paying taxes on that money now, when you're probably in a low tax bracket, is a small price for all that tax-free growth. Since you are under 50, you can contribute up to $$7,500 in a Roth IRA in 2026, up from $7,000 in 2025.

If you have access to a work-sponsored retirement plan, whether now or in the future, aim to contribute enough to get the full company 401(k) match. If your employer matches 50% of your contribution, then you've already doubled your money.

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Tackle student loans selectively

If you have student loans, you may feel like your top financial goal is to pay them off as fast as possible. But not all student loans are equal — private loans generally have the highest interest rates and should be paid first. Then you can consider paying off more slowly any federal student loans with low interest rates as you also pursue other financial goals such as saving.

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Expert Retirement Q&A

About the Author

Christy Bieber is a contributing Motley Fool retirement and Social Security expert covering retirement planning, 401(k)s, IRAs, and other personal finance topics. Christy has written about finance since 2008 and previously taught business courses at Bryant & Stratton College. She holds a law degree from UCLA and a bachelor’s degree in English, media, and communication with a certificate in business management from the University of Rochester. In law school, she earned three CALI Awards for Excellence for the highest scores in civil procedure and contract law exams.

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