Personal Finance

I'm 23 and making $60k annually and I'm living at home still to save money - is this the quickest way to jumpstart my retirement nest egg?

Christy Bieber

Published: February 10, 2025 9:02 am

A 23-year-old Redditor is wondering if he’s taking the right steps to set himself up for success. The Reddit user explained that he is 23 years old, makes around $60,000, and lives at home so he pays only $300 per month in rent. 

Since he has a lot of money available due to his low cost of living, he is contributing 20% of his income to his 401(k), while his company matches contributions up to 6% of his salary. He’s wondering if he is on the right track for future financial security by contributing this much when he can.

So, is the Redditor making smart financial moves?

Saving when you’re young can have a big payoff later

The Reddit user is making one of the smartest money moves possible by saving when he is young. In fact, the steps he is taking right now will make it a lot easier for him to retire rich, retire early, or both, since he is going to have the power of compound interest working for him for so many years. 

To understand just how beneficial the Reddit user’s choices are, let’s take a look at how much his investments will grow over time thanks to the power of compound growth. If he is contributing 20% of a $60K income, that means he’s investing $12,000 a year. With his employer matching contributions up to 6% of his salary, that’s another $3,600 so he’s investing a total of $15,600. 

By investing this amount at 23, he has decades for his funds to earn returns that can be reinvested for him. By age 67, which is the full retirement age for Social Security for anyone born in 1960 or later, the$15,600 he invested at 23 will have turned into just over $1 million, assuming a 10% average annual return. That’s without even a single additional contribution.

If the Redditor decides to keep contributing $15,600 for the foreseeable future, he’ll do even better — and can most likely achieve early retirement. Investing $15,600 from age 23 to age 50 would result in a nest egg of $2,093,675.00, which would produce around $77K in annual income at a safe 3.7% withdrawal rate. 

Invest early to provide more flexibility later

Obviously, the Reddit user is doing the right thing here. And anyone else who is serious about future security should consider trying to make similar moves.

The reality is that the best time to start investing is as soon as you get your first job. There are a few reasons for that. 

• You haven’t yet gotten used to your income and committed it to other things, so it’s easier to find funds to invest.
• You can establish good spending and saving habits from the start that you follow during your life. 
• You can make compound growth work for you

If you’re lucky enough to have the opportunity to live at home, as this Redditor was, then you have another huge advantage too — affordable rent.  

As you get older, you’ll likely have more obligations, like mortgage payments to make or even a spouse or kids to help support. If you start young and set yourself up for security, you can afford to prioritize these other goals and still succeed. If you waited, though, then you may have to sacrifice and struggle a lot more at a time when it’s harder to do it. 

Don’t make life harder for your future self. Consider following the lead of this Reddit user. Talk with a financial advisor, make a plan, and invest aggressively as soon as you can because your future self will thank you.