Retirement Planning for Beginners: FirstGenGuide

This blog post is about retirement planning and what college students need to know to make the best financial decision for themselves.

Let’s be honest—most college students aren’t thinking about retirement planning. And I get it. When you’re just trying to pass your classes or figure out your first job, saving for something 40 years away feels… not urgent.

But for many first-generation college students, understanding retirement comes even later—if at all. We’re often too busy figuring out school, careers, and how to financially survive in the present to think about life after work. That’s why I wanted to write this post.

Retirement is something that should’ve been taught in high school. Because the truth is, everyone deserves to enjoy their life after their working years are over—but that kind of freedom takes planning.

In this post, I’ll walk you through:

Why retirement planning matters (especially for first-gen students)
The different types of retirement accounts

Disclaimer: This is not financial advice. I’m not telling you what to do with your money—I’m just sharing what I’ve learned so you can make informed decisions for yourself.

Retirement Planning: Why is it important?

Retirement planning is super important because they are basically savings and/or investment accounts designed to give you money to live off of when you stop working.

Let’s get something clear right away:

Retirement is not an age—it’s a number.
It’s not about turning 65. It’s about having enough money saved or invested to live off of for the rest of your life.

Most Americans retire in their 60s because that’s when they usually have enough saved in their retirement accounts to support their lifestyle. As of 2025, the average life expectancy in the U.S. is about 77 years—but with advances in healthcare and technology, people are living longer. That means your money needs to last longer, too.

Retirement = A Simple Equation

How much you need to retire depends on:

How much you want to live on yearly
How long you live (which is unpredictable)
How early you want to stop working

These numbers—not your birthday—determine whether you’re able to retire or not.

The Shift Away from Pensions & Social Security

You might’ve grown up thinking retirement happens at 65 because of Social Security or pensions. But here’s the real tea:

Pensions used to be common—your employer saved for you
Social Security is money the government collects from each paycheck and invests for your future

But both are becoming less reliable:

Fewer jobs offer pensions anymore
Social Security is projected to run low on funds within the next decade

That’s why our generation—and especially first-gen students—can’t rely on anyone else to fund our retirement. It’s on us now.

The Most Important Advice? Start Early.

You might be 22 or 23, just graduating undergrad, and thinking:

“Why would I plan for retirement when I haven’t even started my career yet?”

Because time is your superpower.

The earlier you start saving or investing for retirement, the more time your money has to grow in the stock market. This is called compound interest, and it’s literally the cheat code to building long-term wealth.

Here’s why that matters:

Saving $100 now won’t hold the same value in 30 years
Money loses value over time due to inflation
But if you invest that same $100, it can grow into much more over time

Saving vs. Investing for Retirement

Saving means parking your money in a regular savings account. It’s safe—but it doesn’t grow much.
Investing means putting your money into assets like stocks, mutual funds, or ETFs through a retirement or brokerage account. That’s how you beat inflation and actually grow wealth.

The key is to put your money into secure, long-term investments and let it sit. There will be ups and downs—that’s normal. But the longer your money stays in the market, the better your chances of solid returns.

Can’t Save Much Yet? Start Small.

Starting your first job out of college might not leave you with tons of extra cash. I get it. But even if you can only put aside $10, $20, or $50 per paycheck, that’s better than nothing.

It’s not about how much you start with—it’s about starting at all.

There’s something magical about starting early—and it’s called compound growth.

When you invest, your money earns returns. Over time, those returns start earning their own returns, and the cycle continues. This is what we mean when we say, “Let your money work for you.”

The longer your money is in the market, the more time it has to grow on top of itself.

Even if you can only contribute $50 a month for the first few years, it’ll make a huge difference later on—because you’re giving compound interest more years to do its thing.

Now Let’s Talk Retirement Accounts: There are a lot of retirement account options out there, but I’m going to focus on two of the most common ones—especially if you’re just starting your career.

Retirement Planning: 401(k) Plans

A 401(k) is one of the most common retirement accounts offered by employers. It’s a tax-deferred brokerage account, which means you contribute money before taxes are taken out of your paycheck, and your investments grow tax-free—until you withdraw the money in retirement.

Here’s how it works:

You contribute part of your paycheck to your 401(k)
That money is not taxed now, giving you a slightly bigger upfront investment
Your investments grow over time
When you retire and start taking money out, you’ll pay taxes on the total—including both the money you put in and the gains it made

401(k) Contribution Limits (as of 2025)

The annual contribution limit for a 401(k) in 2025 is $23,000 if you’re under 50. These limits usually increase slightly each year to adjust for inflation.

Be careful not to contribute over the limit—the IRS can hit you with penalties and double taxation on the excess.

Watch Out for Fees in Your 401(k)

One thing many people overlook? Fees.

Even something that seems small—like a 0.50% annual fee—can seriously eat into your long-term gains. Before committing to your 401(k) investments, check:

Expense ratios on your funds
Advisory or management fees
Whether your employer offers low-fee index funds

My Personal Approach (Not Financial Advice)

Personally, I don’t use a financial advisor—I like to do my own research. Most of my retirement investments are in the S&P 500 index fund, which tracks the top 500 U.S. companies. I automate my investments to keep it simple and consistent.

Why the S&P 500?

It’s historically shown strong, long-term growth
It has a low expense ratio (so fees don’t eat into my profits)
I trust in its track record—not just for returns, but for diversification

Disclaimer: This is not financial advice—just a look at how I personally manage my investments. Always do your own research or speak to a financial advisor before making decisions.

Take Advantage of Your 401(k) Match (a.k.a. Free Money)

Now that you understand what a 401(k) is and the fees to watch out for, let’s talk about maximizing your benefits—specifically when it comes to employer matching.

Not every company offers this, but if yours does: take full advantage. Employer matching is basically free money for your future.

What Is a 401(k) Match?

When your employer offers a match, they agree to contribute money to your 401(k) based on how much you contribute. A common example might sound like:

“We match 50% of the first 6%.”

That means:

Your company will match 50 cents for every dollar you contribute
But only up to 6% of your salary

So if you make $60,000/year:

6% of that is $3,600
Your employer would contribute $1,800
That’s $1,800 in free money just for contributing to your own retirement

What Is Vesting?

Here’s the catch some people miss: vesting.

Vesting refers to how much of your employer’s contributions you’re legally entitled to if you leave the company. Some companies:

Vest you immediately (you own it all right away)
Others use a vesting schedule (like 3 years before you keep 100%)

So, if your employer says your match vests after 3 years, and you leave after 1 year—you might not get to keep any of the matched money.

Always check your company’s vesting policy in your HR or onboarding documents!

Retirement Planning: Roth IRA

Alright, let’s talk about the Roth IRA—because not everyone has access to a 401(k), and that doesn’t mean you’re out of options.

A Roth IRA is a retirement account that you can open on your own—no employer needed. You just need to open one with a brokerage (I opened mine with Schwab), and you can start putting money into it whenever you want.

What makes a Roth IRA so special? You contribute money that’s already been taxed, and in return, your investments grow tax-free—and you can withdraw them tax-free when you retire.

That means:

You already paid taxes now (when you put the money in)
You don’t owe taxes later when you take the money out (as long as it’s been at least 5 years and you’re over 59½)

Honestly, I think that’s a huge win.

Why I Like Roth IRAs (Just My Take)

Here’s why I personally like the Roth: I’d rather pay taxes now while I’m making less money at the beginning of my career than wait until I’m making more and possibly owe more.

Because let’s be real—when you’re older, you probably won’t have the same deductions (no dependents, no student loan interest, maybe no mortgage). Plus, with the way our country’s debt is looking… I wouldn’t be surprised if taxes go up in the future.

So for me? I’d rather pay taxes now and be done with it.

How Much Can You Contribute?

As of 2025, you can put up to $7,000 per year into a Roth IRA. This number usually goes up every few years to keep up with inflation.

You can invest this money into stocks, index funds, ETFs—whatever you want. You’re not locked into a handful of employer-chosen funds like with a 401(k), which gives you way more flexibility.

That’s one of the things I love about it—you have control over where your money goes.

“Wait… Can I Have Both a Roth IRA and a 401(k)?”

YES. You can absolutely have multiple retirement accounts:

A 401(k) from work
A Roth IRA you open yourself
Even a pension if you work a government job

You just have to follow the contribution limits for each one.

Here’s what I personally do (again, not financial advice—just sharing what works for me):

If I have a job that offers a 401(k) match, I’ll contribute at least enough to get that free money
Then I’ll prioritize putting the rest of my retirement budget into my Roth IRA, because I like the tax benefits and flexibility
Even if I had a pension (like from a government job), I’d still open a Roth IRA. Why not stack multiple retirement streams if you can?

Retirement Planning: Final Thoughts

In this blog post, we went over why it’s important to start thinking about retirement early, especially as first-gen college students and young professionals. I broke down the basics of both 401(k) plans and Roth IRAs, and I even shared my personal approach to retirement investing—not as financial advice, but to give you an idea of what’s possible.

I wanted to share this info because, let’s be real—the U.S. is slowly shifting the responsibility of retirement onto us. Social Security is shaky, pensions are rare, and we’re part of a generation that’s being asked to figure it out on our own.

As a first-gen student myself, I know what it feels like to be scared to ask about money or retirement because you don’t want to seem like the only one who doesn’t know. But here’s the truth: a lot of people don’t know. And most of our parents didn’t teach us this stuff—not because they didn’t care, but because they weren’t taught either.

My parents worked labor jobs and will retire with union pensions—but for many of us, we’re the first in our families to even be offered retirement plans.

And that’s why I wrote this post. I hope it helped you feel more confident, less confused, and more empowered to start thinking about your future—on your terms.

This blog post is for educational purposes only and should not be considered financial advice. Please consult a licensed financial professional for guidance on your specific situation.

If you found this blog post about retirement planning helpful, be sure to check out my other posts on financial literacy—I’ve got more tips for first-gen students navigating money, adulthood, and everything in between: