Best Ways to Invest Your Money at Every Age

Best Ways to Invest in Your 20s

Retirement may feel like a long way off as a 20-something, but you have one very important advantage at this age: time. The longer your money is invested, the more time it will have to grow, thanks to compounding interest. And that could supercharge your wealth in a big way.

Example: Let's say you started investing $200 a month beginning at age 25. After 40 years, you'd have $528,225 (assuming a 7% average annualized return). But waiting until age 40 to start investing the same amount and assuming the same return would result in $163,159.

When it comes to building assets in your 20s, T. Rowe Price recommends an asset allocation of 90% to 100% stocks and up to 10% bonds. You might consider leaning into higher-risk assets like growth stocks. These are stocks that have a strong track record of growth and are expected to continue moving in the same direction (though returns are never guaranteed).

The Big Picture

One benchmark is to save 15% of your income for retirement when you're in your 20s. You can also use this time to build a strong financial foundation. That includes making a budget, building your emergency fund and paying down debt. Establishing good credit is another crucial money move. A healthy credit score can help you qualify for the best rates on credit cards, car loans, mortgages and other financial products.

Learn more: How Much to Save for Retirement by Age

Best Ways to Invest in Your 30s

In your 30s, you'll likely be focused on career growth and increasing your income. You'll also want to keep up the momentum when it comes to investing. According to 401(k) plan administrator Vanguard, the average 401(k) balance for 25- to 34-year-olds was $42,640 in 2024. If you're behind that target, know that it's never too late to begin. Getting a late start is better than sitting on the sidelines and missing out on long-term gains.

T. Rowe Price recommends the same asset allocation for 20- and 30-somethings: 90% to 100% in stocks and 0% to 10% in bonds. If you have access to a 401(k) through work, be sure to contribute at least enough to secure an employer match, if your employer offers one. That free money can help grow your wealth at a faster clip.

Learn more: How to Invest Your 401(k)

The Big Picture

Fidelity Investments suggests having the equivalent of your annual salary saved by age 30. If you're not quite there, don't stress. The most important thing is getting in the habit of earmarking a portion of every paycheck for retirement. Investing 15% of your income is a common benchmark, but start where you are. That might mean saving 10% at first and gradually increasing that number over time.

Your 30s are also a great time to start planning for other financial goals, whether that's saving for a down payment on a house or setting money aside to start a family. You can also continue strengthening your emergency fund, using a high-yield savings account to help you grow this money even more.

Tip: Consider putting at least part of your retirement savings in a Roth 401(k) or Roth IRA in your early earning years. These accounts are funded with after-tax earnings, and you won't pay any taxes on withdrawals in retirement, so they can be good options for younger investors who plan to earn more (and be in a higher tax bracket) in later years.

Best Ways to Invest in Your 40s

If you're hoping to retire in your 60s, that means you're only about two decades away from leaving the workforce. The good news: You're likely entering your peak earning years. Your 40s may be a good time to meet with a financial advisor to review your situation and fine-tune your retirement savings plan.

Because you still have many years to retirement and can recover from near-term market fluctuations, T. Rowe Price recommends putting 80% to 100% of your contributions in stocks and 0% to 20% in bonds in your 40s to benefit from stocks' higher potential long-term gains.

The Big Picture

The goal, according to Fidelity, is to have three times your annual salary saved by age 40; investing 20% of your income for retirement is the target for your 40s and beyond. Maxing out your retirement accounts can help you grow your savings and secure some attractive tax perks. In 2025, you can contribute up to $23,500 to a 401(k) and $7,000 across all individual retirement accounts (IRAs).

Learn more: 401(k) vs. IRA Contribution Limits

Best Ways to Invest in Your 50s

By age 50, Fidelity recommends having six times your annual salary saved, but there isn't one magic number. According to Vanguard, the average 401(k) balance for investors ages 45 to 54 was $188,643 in 2024.

Your investing strategy will likely become more conservative from here on out. That's because you'll have less time to rebound from periods of market volatility. If a large portion of your portfolio is invested in stocks and the market dips while you're retired, that could take a big bite out of your nest egg. T. Rowe Price suggests holding 65% to 85% stocks and 15% to 35% bonds.

The Big Picture

This decade is a good time to think more specifically about your retirement goals: What do you want life to look like when you're no longer working? And how much money do you think you'll need to live comfortably for multiple decades? If your current savings rate doesn't support your vision, it may be a good idea to work with a financial advisor to recalibrate your goals or investment strategy. If you invest for retirement through your employer, the company's retirement plan administrator may also have a representative you can contact.

One bright spot is that folks who are 50 and older can make catch-up contributions to certain tax-advantaged retirement accounts. In 2025, you can kick in an extra $7,500 to a 401(k) and $1,000 to IRAs.

Best Ways to Invest in Your 60s

Fidelity recommends having eight times your annual salary saved by age 60. As you enter your 60s, ask yourself when you reasonably expect to retire. If you enjoy your work and are earning a good income, you might not be ready to slow down just yet—but it's still an important thing to think about. The numbers might reveal that working for a few extra years could significantly boost your savings. In 2023, the median retirement age in the U.S. was 62, according to the Transamerica Center for Retirement Studies.

In terms of your asset allocation, high risk generally isn't your friend at this stage of life. You might dial down to 45% to 65% stocks, 30% to 50% bonds and up to 10% cash, according to T. Rowe Price.

The Big Picture

In 2025, people ages 60 to 63 can make even higher catch-up contributions of $22,250 to employer-based retirement plans. That's good news if you want to bump up your savings as much as possible before retiring.

When deciding when to retire, keep in mind that you likely won't be eligible for Medicare until age 65—and even then, you can expect premiums, copays and deductibles. And while you can technically begin collecting Social Security at age 62, you'll get a higher benefit if you wait until at least your full retirement age. That's 67 for people born in 1967 or later; you can get even more if you wait until age 70.

Best Ways to Invest in Your 70s and Beyond

There's a common misconception that retiring means that you'll stop investing. It's actually important to stay invested during this time to help your nest egg keep up with inflation. As the cost of consumer goods rises, your purchasing power will decline. That means your savings will diminish in value over time. Continuing to invest can help shield you from the effects of inflation.

That doesn't mean you have to assume a ton of risk in your investment portfolio. T. Rowe Price suggests holding up to 20% cash, 40% to 60% bonds and 30% to 50% stocks. In reality, you may draw retirement income from:

• Investment accounts like retirement accounts and brokerage accounts
• Social Security benefits
• Pensions
• Annuities
• Health savings accounts (HSAs)
• Cash value life insurance

The Big Picture

If you've got money in a tax-deferred retirement account, such as a 401(k) or traditional IRA, you'll need to start taking required minimum distributions (RMDs) beginning at age 73. This money will count as taxable income, so relying too heavily on these accounts could potentially push you into a higher tax bracket. One workaround is to have some nontaxable retirement income in the mix—like Roth accounts.

A financial advisor can help you strike the right balance. They can also help rebalance your portfolio throughout retirement to ensure that it continues to reflect your desired asset allocation.

Frequently Asked Questions

The Bottom Line

Your investment strategy isn't set in stone. The way you invest in your 20s will probably be different from the approach you take in your 50s and beyond—and that's a good thing. Adjusting your strategy over time can allow you to recalibrate as needed to support your goals and time horizon.