If you're in your 20s or 30s, retirement may be the least urgent item on a long and expensive financial to-do list.
Author
- Ernest Biktimirov
Professor of Finance, Goodman School of Business, Brock University
Paying the rent or a mortgage comes first. There may be student loans or credit-card balances to pay off. You might be trying to build an emergency fund or save for a first home. Add higher grocery bills, and retirement can easily become a problem for your future self.
That feeling is understandable. Canadians aged 25 to 44 have recently reported high levels of financial stress . In the United States, younger adults are less likely than older adults to say they are financially comfortable.
But retirement planning should begin earlier than many people think. That doesn't mean it should come first. Rather, retirement should be one part of a financial plan that changes with your age, income, debts and goals.
Three decisions matter especially: know what retirement benefits you have, put competing financial goals in a sensible order and build a long-term saving habit.
No one's 20s and 30s look the same. You might be saving for a mortgage or just struggling to pay rent. You could be swiping dating apps, or trying to understand childcare. No matter your current challenges, our Quarter Life series has articles to share in the group chat, or just to remind you that you're not alone.
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Know what you're working with
Retirement systems differ across countries, but the basic challenge is similar: workers need to understand which income sources will be available to them later in life.
In Canada, most people build retirement income from three sources: the Canada Pension Plan, employer pension plans and a registered retirement savings plan (RRSP) or tax-free savings account (TFSA) .
The Canada Pension Plan is mandatory: you contribute just under six per cent of your income, matched by your employer. Check your contribution statement through your My Service Canada Account to see how much you are on track to receive.
Today's younger workers will also benefit from the enhanced Canada Pension Plan , which is gradually increasing the share of average work earnings it replaces in retirement from about one quarter (25 per cent) to one third (33 per cent). The increase will depend on how much and how long a person contributes under the enhanced system.
In the U.S., Social Security provides a public retirement benefit , while many workers also rely on employer-sponsored plans and individual retirement accounts. In the United Kingdom, the state pension is supplemented by workplace pensions, with automatic enrolment playing an important role in expanding coverage.
The details differ, but the lesson is the same: before deciding how much you need to save yourself, find out what public and workplace benefits you are already accumulating.
Look at your workplace plan
The next step is checking your workplace benefits. For some people, the first retirement decision is in an employee benefits package .
Some employers offer defined-benefit pensions based on earnings and years of service; others offer defined-contribution plans, where retirement income depends on contributions and investment performance.
Only about 38 per cent of Canadian employees had an employer-sponsored pension plan in 2023 . If you do, check the type, whether you are automatically enrolled, employer contributions or matching and what happens if you change jobs.
Beyond that, RRSPs and TFSAs are your main personal saving tools if you're in Canada. In 2026, contribution room is $33,810 for RRSPs and $7,000 for TFSAs although few people in their 20s need to max them out.
The U.S. equivalent includes employer plans such as 401(k)s as well as individual retirement arrangements , including traditional and Roth IRAs. In the U.K., workplace pensions are complemented by personal pensions and other savings vehicles such as individual savings accounts.
Put your financial goals in order
"Start as early as possible" is common retirement advice. Time does help investments grow, but that doesn't mean maximizing retirement contributions should come before every other financial goal.
Earlier contributions can benefit from decades of tax-deferred growth, but maximizing an RRSP in your 20s or 30s is not automatically the best choice.
For younger workers who are short of cash today and expect their income to rise substantially, delaying retirement saving altogether for a period can be economically reasonable .
Suppose you have $300 left at the end of the month. Should it go toward retirement, a credit card, a house or an emergency fund? High-interest debt, like credit cards, usually come first. The interest you are paying almost certainly outweighs what you would earn investing instead. Credit card debt also causes greater financial stress .
But if you have lower-interest debt, such as a student loan, and access to an employer match, it's often worth contributing enough to get the full match before aggressively paying down the loan.
Building emergency savings matters, too. Canada's Financial Consumer Agency recommends working toward enough emergency savings to cover three to six months of expenses . While this may initially be out of reach, starting small is worthwhile.
Without accessible savings, a car repair, dental bill or period without work can push you back into expensive debt. Retirement saving matters, but so do expensive debt and an emergency cushion.
Start before it feels urgent
People with greater financial knowledge are more likely to plan for retirement . But you don't need a 40-year spreadsheet to get started. If you can't save much now, plan to increase your retirement contributions when your income rises or another financial obligation disappears.
In your 20s and 30s, focus first on a few questions: What workplace benefits am I leaving unused? Do I have high-interest debt? Could I handle an unexpected expense without borrowing? Am I saving for a home? And am I putting something toward my future when I reasonably can?
Retirement planning starts before retirement becomes your biggest financial priority. The key is not to maximize saving immediately. It is to make deliberate choices now, so that short-term pressures do not quietly become a long-term retirement problem.
Retirement may be decades away. Planning for it does not have to be.
Ernest Biktimirov receives funding from the International Partnership of Business Schools.
