Updated for the 2024 tax year.

You know that feeling on a Friday, on or around the 15th of the month, when your direct deposit hits, your bills are auto-paid, and you’re looking forward to a weekend with zero work and 100% good times? That’s what getting ready for retirement should feel like, only the “weekend” lasts for the rest of your life, and the planning starts way in advance. Like now.

Before you say, “I’m too young to think about retirement,” remember the last time you had one of those “How is it only Tuesday?” moments. That 30-second daydream you had about traveling the world or sitting by the fire at your beach house — whatever your deal is — that’s your retirement dream. Now you can make it a goal and plan for it.

With the help of these six steps.

1. Know how much you need.

Here’s one of the ways we can help. When you invest with Ellevest, you can create a Retirement goal, and we’ll recommend a personal monthly investing goal based on what you’ve told us about yourself and how much you’ve saved so far in your existing retirement accounts. We estimate you’ll spend less than you do before you retire (think: no commuting costs, or expensive work clothes), but not too much less. We also factor in average lifespans, because those are different by gender. Women live 6–8 years longer than men, on average, so it’s really important to feel confident that you’re planning for your entire financial future.

2. Get started saving.

How much should you save? Well, it depends on when you start. The bottom line is the earlier you start, the less money you need to sock away. That’s because of compounding, which Einstein is said to have called “the most powerful force in the universe.” Your money starts working for you right away, and even small amounts can grow to large amounts over a long investing horizon.

If you’re not saving yet, going from 0% to 10% or 15% might sound daunting. It’s OK to start off slowly. Take a close look at your budget and see how much you can afford to comfortably save now. Then increase that number a little bit at a time.

3. Invest for the future you want.

The sooner you start investing what you’re saving, the more time you’ll give your money to grow. A lot of people, particularly women, make the mistake of putting off investing. Maybe you think you don’t know enough yet or have enough money yet to get started or don’t have enough time. But every day that you’re not investing, it can cost you money, on average.

The first place you should save for retirement is your employer-sponsored 401(k) plan, if you have one. This money comes directly out of your paycheck before it hits your bank account, so you may hardly notice. A major advantage to investing here is your contributions are made pre-tax. That means you’re investing your money before it’s taxed, which reduces your tax liability for the year you contribute and allows you to stretch your savings further. The money is taxed when you withdraw in retirement.

If you’re already investing in your company 401(k), fantastic. An important question to ask yourself is “How am I investing?” With your Retirement goal, Ellevest will give you recommendations on how to allocate your “outside” retirement accounts, so you can get a more comprehensive investment approach and the best chance for success.

4. Get that company match.

If your employer offers a employer 401(k) match or similar retirement plan, definitely take advantage of that benefit.

Be sure to save enough to capture the company match. For example, if your employer offers to add 50 cents to your account for every dollar you contribute up to 6% of your salary (a commonly offered formula for this benefit), you should defer at least 6% of your pay to capture the full match.

In 2024, you can contribute up to $23,000 to a 401(k) or similar employer-sponsored retirement plan. If you’re age 50 or older, you can contribute an extra $7,500 this year, for a total of $30,500.

5. Open an IRA.

The next stop for saving for retirement is an Individual Retirement Account — aka, an IRA. Anyone with earned income can open an IRA. That’s great news, especially if you’re a freelancer, or work at a place without a 401(k) plan. Once you open an IRA, it stays in the same place, even when you switch jobs; it’s not housed with your employer.

IRAs come in flavors: There’s the traditional IRA, a Roth IRA (which comes with income limits), and — if you’re a literal boss and are self-employed — you may want to open a Simplified Employee Pension IRA (SEP IRA). The basic rule with IRAs is you’re going to pay the US government taxes at some point. The question is when. With a traditional IRA, the government postpones your taxes. You contribute pre-tax earnings, reduce your tax liability for the year, and watch that money grow on a tax-deferred basis year over year. You don’t pay the piper until you withdraw your money in retirement.

With a Roth IRA, you pay taxes on the amount you contribute first. You don’t reduce your current tax liability, but once you pay those taxes, you don’t have to pay them again. What does that mean? It means you’re not paying taxes on the growth of your investments. When you make withdrawals, every last penny is yours to keep.

While anyone can contribute to a traditional IRA, eligibility for a Roth IRA is based on your income level. You can open an IRA at Ellevest, or at another financial services provider. Whether you go with a traditional or Roth account, the bottom line is an IRA lets you add thousands of dollars a year to your retirement savings. In 2024, your total contributions to all of your traditional and Roth IRAs cannot be more than $7,000 ($8,000 if you’re age 50 or older).

Then there's the Simplified Employee Pension IRA (SEP IRA) for people who are self-employed or small business owners. It’s kind of like a traditional IRA: Your contributions are tax-deductible and your earnings grow tax-deferred, so you only pay taxes on the money when you withdraw it. But you can contribute waaaaaay more money to a SEP IRA. The maximum for 2024 is 25% of your earnings, up to $69,000.

6. Put yourself on autopilot.

Automation is the easiest way to save. When you choose how much to put toward your 401(k) — whether it’s a dollar amount or a percentage of your pay — the money goes into your account before it’s taxed, and before you even get a chance to think about spending it. You can replicate that process for an IRA or other investment account by setting up automatic monthly payments through your bank. Doing this removes the temptation of spending instead of saving.

So yeah, retirement may seem a far way off — but there was a time when the age you are now was also unthinkable. Following these six steps will help make your retirement less “daydream” and more “plan.”