These decisions you make in your 20s - not your income - determine whether you'll spend decades in debt or retire comfortably

By Kurt Supe

Don't just focus on stock picks when you're thinking of building retirement wealth

Your 20s is the perfect time to lay down the foundation for your retirement. (Photo subject is a model.)

I have had thousands of conversations over the years with young families who have dreams of living debt-free and achieving major financial goals, like owning a home or sending their children to college. In the 30 years since I've started, I've seen how things turned out for hundreds of those couples. Some are now retired and financially independent. Others are still working at jobs they'd quit if they could.

When I got started in the financial-services industry in my mid-20s, very few people I worked with had any money. For years, I sat at kitchen tables with couples in their 20s and early 30s who had a car payment, credit-card debt and kids they wanted to send to college one day. They also had no real sense of whether they could pay for it all.

We had pretty basic conversations about how to get rid of debt, whether to open a 529 plan for the baby, and if they could afford to bump their 401(k) contributions from 3% up to 6%.

The decisions these couples made in their 20s had a lasting impression on their financial circumstances three decades later. Income mattered some, but it wasn't what determined the outcome.

Young adults are often told to start early, no matter how much money they have, because by the time you have enough money to feel qualified to invest, the decisions that mattered most happened 20 years before.

Here's what I'd go back and tell myself at 25, and what I wish those in their 20s knew now, to be on the right path for a lofty retirement. You'll notice they're less about the actual investments, and more about the life you're building.

Choose where you live carefully. Keep your housing costs extremely low. Live with a parent, rent a small apartment with a roommate or two, or even better, buy a duplex and rent out the other side to help pay the mortgage. Those are all good ways to keep housing cheap in your 20s.

If you're in a place where that math doesn't work, and in cities like New York or San Francisco it usually doesn't, you've got three options. Add a roommate instead of getting your own place. Move 20 or 30 minutes out of town and deal with the commute for a few years. Or stay at home longer if that's possible.

Pick what's worth the debt. Not all debt is bad. Taking on debt for something that will increase in value or boost their income is warranted. A mortgage on a house you can comfortably afford or buying that duplex I mentioned above to earn some rental income are perfectly fine examples of "good" debt. But the debt for the vacation, the wedding, the furniture in the basement, the boat - all of that costs you twice. You pay for it when you buy it, and then you pay interest on it for years after. The Federal Reserve says the average credit-card rate is 21%. Put $5,000 on a card at that rate and pay $100 a month, and it takes 10 years to pay off and costs about $6,970 in interest. You paid almost $12,000 for $5,000 worth of stuff.

Don't jump for the fancy car immediately. Experian reports that in the first quarter of 2026 the average new-car payment was up to $770 a month, on an average loan of $43,925 over 69.5 months. The average used-car payment is $531 a month.

That $239-a-month difference doesn't seem like much, but if you went with the used car every time you bought one from 25 to 65 years old and invested the difference at a hypothetical 7% return, you'd be astonished to find an additional $627,000 or so in your account. None of the thousands of couples I've worked with over the past 30 years have ever told me they wished they'd bought a fancier car. And if a brand-new vehicle is important to you, save for it in addition to your other financial goals so that you can put a larger down payment on the car and have a smaller monthly payment.

Contribute to a Roth while you are in a low tax bracket. For 2026, the Roth IRA contribution limit is $7,500. With a Roth, you pay the tax now, at whatever rate you're in today, and you never pay tax on qualified withdrawals. In your 20s your income is usually the lowest it'll ever be, which is exactly when paying that tax up front is the best deal you'll get.

This next example would be good for every 25-year-old to tape to his or her fridge so it's not forgotten. Suppose you start putting money into a Roth IRA the year you turn 25. You add $7,500 each year for 10 years, through age 34. After that, you add nothing for the next 30 years. Using a hypothetical 7% return, your $75,000 in contributions would grow to about $789,000 by 65. Now compare that to your hypothetical twin, who waits until 35 to start. Your twin adds $7,500 every year for 30 years, through age 64, puts in $225,000 and ends up with about $708,000 at 65. You'd end up with about $80,000 more even though you contributed 20 years less.

Every year you delay costs you part of that head start.

Invest simply. If you want the best shot at a big retirement nest egg by 65, own a handful of good quality, well-diversified stock and bond funds.

Morningstar analyzes investor performance over time in its annual Mind the Gap study. For U.S. stock funds and ETFs over the 10 years through 2025, investors did quite well. The funds returned 13.3% a year on average. The average dollar actually invested in them, which is the amount of money investors actually earn after accounting for what they contributed or withdrew, earned 12.8%. Spot bitcoin ETFs told a very different story. From their January 2024 launch through June 2026, these funds returned 8.5% a year, but the average dollar invested in them lost 5.8% a year.

This isn't really about crypto. The more exciting an investment is, the higher the risk of buying when it's going up and selling when it's going down. If you want in on an exciting new investment opportunity, use money you'd be fine losing. And don't forget, always do your research.

Work with a GOOD adviser as early as possible. In my experience, most people wait until their 50s, when retirement is finally getting close, to start working with a financial adviser. But the biggest decisions for making retirement a success were made 25 years or more prior.

Today a good adviser looks a lot more like a financial coach than a product salesperson. You don't need a stock picker. What you need is someone who learns where you are, where you want to go, and what's standing in the way, then helps you build a savings plan and pick some low-cost, high-quality investments you actually understand. That adviser would look at your cash flow, your taxes, your savings, your insurance and how all of those pieces affect each other before recommending anything. More importantly, you need someone who can keep you from bailing out when the market drops 30% or 40%.

At some point you'll need to pick investments or insurance products. But if the first real conversation is about a specific insurance or investment product, you should question if this professional is more interested in your full financial picture or making a sale.

Find someone who will adjust your plan as your life changes. Your plan is only as good as the last time someone updated it, and a lot happens over 25 years. You'll change jobs, get raises, have kids, buy and sell houses, and live through a few market crashes. When an adviser gets paid a one-time commission, there's a good chance you'll never see them again after the sale.

Some advisers also charge a flat fee for planning. That can be a great fit if you're just starting out and don't have a big pile of assets yet. You get real advice on budgeting, paying down debt, and building savings without being pushed toward products you don't need or paying a percentage on money you haven't accumulated yet.

Here are five questions to ask a potential adviser: How are you compensated, and can you show me that in writing? Do you have credentials like a CFP or CPA? Do you work with people at my stage? What else do you do for your clients besides investing their money? What will you tell me to do the next time the market falls 30%?

If they can't answer the first question honestly, you don't need to hear the rest of the pitch.

Think about the life you want to lead. Don't just look at the numbers. Think of other aspects of your life, like your health, who your friends and family are, your hobbies and interests. Taking care of your body and your mind now is an integral part of your well-being later in life (and could even help you avoid some big health bills).

Jobs are important, but what kind of lifestyle do you want to have? Retirement-planning software won't ask you what you're looking for in a partner or how often you exercise, but those are two major aspects of your life that will impact what your future retirement looks like.

Kurt Supe is a CPA and retirement planner with CFD Investments, Inc., Registered Broker Dealer, and Creative Financial Designs, Inc., Registered Investment Adviser. For additional information and disclosures, visit www.creativefinancialgrp.com. Kurt is on X and YouTube at @KurtSupeCPA.

-Kurt Supe

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