The Millennial Legacy

Personal Finance

Roth IRA, 401(k), or “Hope for the Best”? A Personalized Approach to Retirement Planning

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If you’ve ever stared at a benefits form or investment platform thinking, “Should I check Roth IRA? Or is it 401(k)? Or do I just hope for the best?”—you’re not alone.

Most people know they should be saving for retirement. But the moment you dive into options, you’re hit with an alphabet soup of accounts, limits, taxes, penalties, and terms no one explained in school.

This guide is for anyone who wants a straightforward explanation of tax-advantaged accounts and how to think about their retirement savings, no matter your age or income.

Let’s break it down.

What Is Retirement Planning, Really?

Retirement planning simply means figuring out how to support yourself when you’re no longer working full-time. It’s about:

  • How much money you’ll need
  • Where that money will come from
  • How to make your money grow in the meantime

Retirement planning usually includes:

  • Estimating future expenses
  • Using tools like Roth IRAs and **401(k)**s to save
  • Factoring in Social Security or pensions (if you’re lucky)

The earlier you start, the more time your money has to grow—and the less you’ll need to save each month.

Roth IRA vs. 401(k): What’s the Actual Difference?

Here’s the core difference: it’s about when you pay taxes.

FeatureRoth IRA401(k)
ContributionsAfter-tax (you pay taxes now)Pre-tax (you pay taxes later)
Withdrawals in retirementTax-free (if rules met)Taxed as income
Contribution limits (2024)$6,500/year (or $7,500 if 50+)$23,000/year (or $30,500 if 50+)
Income limitsYes (IRS income limits)None
Employer matchNot availableOften included
RMDs (Required Withdrawals)NoneYes, starting at age 73

What Is a Roth IRA?

A Roth IRA is a retirement account that you fund with money you’ve already paid taxes on. That means when you retire, you can withdraw both your original contributions and your earnings completely tax-free—as long as you’re 59½ and the account is at least five years old.

📊 According to the Investment Company Institute, about 28% of U.S. households owned a Roth IRA as of 2023 [https://www.ici.org/statistical-report/retirement-assets].

Roth IRA Contribution Limits (2024)

  • $6,500 if you’re under 50
  • $7,500 if you’re 50 or older
  • You must earn less than $146,000 (single) or $230,000 (married) to contribute the full amount

What Is a 401(k)?

A 401(k) is an employer-sponsored retirement account that allows you to contribute pre-tax income. That means you don’t pay taxes now—only when you withdraw the money in retirement.

Many employers offer to match part of your contribution, which is essentially free money toward your future.

📊 According to Vanguard, the average 401(k) balance was $112,572 in 2023, but the median (more realistic for most people) was $27,376 [https://institutional.vanguard.com/content/dam/inst/vanguard-has-a-long/investment-approach/research/pdf/How_America_Saves_2023.pdf].

401(k) Contribution Limits (2024)

  • $23,000 if you’re under 50
  • $30,500 if you’re 50 or older
  • No income limits

Why It’s Called “Tax-Advantaged”

Both Roth IRAs and 401(k)s are considered tax-advantaged accounts because they give you a break on taxes—just at different times.

  • Roth IRA: pay now, withdraw tax-free later
  • 401(k): skip taxes now, pay them when you retire

These tax benefits are what make them smarter than keeping all your savings in a checking or standard brokerage account.

What If I Can’t Max Out Both?

If you can only do one (which is most people), here’s a simple decision flow:

✅ Your employer offers a match?
Start with the 401(k)—contribute at least enough to get the full match.

✅ You expect to be in a higher tax bracket later?
Go Roth IRA—pay taxes now, skip them later.

✅ You’re early in your career?
Roth IRA is usually best—you’re likely in a lower tax bracket now than in the future.

✅ You want to save more than Roth allows?
Use both. Start with Roth, then go to your 401(k).

What Does This Look Like Month to Month?

Let’s say you can set aside $300 a month. You could:

  • Put $150 into your 401(k) and get a $150 employer match = $300
  • Put $300 into a Roth IRA
  • Or split it between both (e.g. $150 into each)

The key is to automate your savings so it happens before you spend. Most employers and brokerages make this easy.

How Age (Not Just Income) Changes the Retirement Game

Your stage of life plays a huge role in how you should approach your retirement planning—regardless of your income or career path.

In your 20s and 30s, the priority is usually building the habit—even small contributions to a Roth IRA or 401(k) matter because of compound growth. This is the time to take advantage of Roth accounts, especially if you’re in a lower tax bracket. You’re investing in time more than cash.

By your 40s and 50s, your strategy shifts. With retirement closer on the horizon, the focus becomes increasing retirement savings rates, maximizing employer matches, and possibly adjusting your risk tolerance. You might consider increasing 401(k) contributions and even using catch-up contributions if you’re 50 or older.

For those in their 60s and beyond, it’s about decumulation planning—thinking through when to withdraw, managing Required Minimum Distributions (RMDs), and balancing withdrawals with Social Security and other income streams.

🧠 This naturally overlaps with the generational perspective:
Each generation is navigating retirement planning from a different point along this age-based path. As of 2025, Gen Z is just starting, Millennials are in the building phase, Gen X is playing catch-up, and Boomers are managing withdrawals. Your financial strategy will reflect your age—but understanding where your generation sits helps explain what you might be seeing or feeling about money right now.

Final Thought: You Don’t Need to Be a Finance Nerd

You don’t need to memorize tax codes or predict the stock market to make smart moves. But you do need to start.

“The best retirement account is the one you actually use—and the earlier you start, the easier it gets.”

Whether it’s a Roth IRA, a 401(k), or a little of both, the goal is to build momentum. Your future self—whatever generation you’re part of—will thank you.

The Psychology of Spending: Behavioral Finance and Why Budgeting Feels So Personal

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Budgeting should be simple. Money in, money out, don’t spend more than you earn—right?

But for most people, it’s not that simple at all. You set a budget with the best intentions, only to blow it the next weekend. You feel guilty after buying something you don’t need, or worse—you justify it because “you deserve it.”

This isn’t a failure of discipline. It’s behavioral finance in action—the study of how our emotions, habits, and thought patterns influence financial decisions in ways that often defy logic.

Understanding the psychology of spending doesn’t just help you save more. It helps you make peace with the part of your brain that doesn’t always do what’s “best”—and build a system that works with your emotions, not against them.

Behavioral Finance 101: The Brain Behind the Budget

Behavioral finance is a field that blends psychology and economics. It explains why people don’t always act in their own financial best interest—even when they know what they should do.

Classic examples include:

  • Keeping a low-interest savings account while carrying high-interest credit card debt
  • Overspending on experiences to avoid FOMO
  • Avoiding your bank app when you already know you went over budget

One famous concept is mental accounting—the way we assign different values to money based on where it comes from. (Ever notice how easily you spend a tax refund vs. your paycheck?)

📊 A 2022 Morning Consult study found that 59% of U.S. adults have made purchases they later regretted, and more than half say their financial decisions are “at least somewhat emotional.”

In short: humans are emotional creatures. And when it comes to money, we don’t check our emotions at the door.

Why Spending Feels So Personal (and Emotional)

A Capital One and Decision Lab study found that 77% of Americans feel anxious about their financial situation, even among those earning $100,000 or more [https://www.capitalone.com/about/newsroom/americans-financial-wellness-report/].

One major driver? Emotional spending—using purchases to regulate mood, cope with stress, or create a sense of control.

📊 In 2023, Bankrate reported that 49% of Americans admitted to buying something to “feel better” in response to stress, sadness, or boredom [https://www.bankrate.com/banking/savings/impulse-buying-survey/].

Examples:

  • After a tough day, you order takeout instead of cooking
  • You buy a new outfit to feel more confident at an event
  • You “celebrate” payday with an online shopping spree

This is the psychology of spending in action. And it’s completely normal.

How Your Money Mindset Is Formed

Your money mindset is the mental framework you use to interpret what money means to you. It’s shaped by:

  • Childhood experiences
  • Your parents’ attitudes toward debt and saving
  • Cultural and generational influences
  • Life events, like job loss or financial windfalls
  • 📊 According to a 2023 Credit Karma survey, 69% of Americans say their financial habits are directly influenced by their parents, and nearly 1 in 3 Millennials say they were never taught how to budget.
  • This is why some people avoid checking their balance entirely—it’s not just disorganization, it’s emotional discomfort rooted in learned beliefs.

Common Traps in Our Spending Habits

Spending habits are often driven by deep behavioral patterns. Behavioral finance research has identified several traps:

🔹 The Pain of Paying

Paying with cash is more “painful” than paying with a card.
📊 In a well-known MIT study, people were willing to pay up to 100% more for the same product when using credit instead of cash.

🔹 Present Bias

We heavily discount the future and prioritize short-term gratification.
📊 The American Psychological Association notes that 80% of people say they know saving for the future is important—but only 50% are actively doing it.

🔹 Lifestyle Creep

As income increases, so does spending.
📊 A 2023 LendingClub study showed that 60% of Americans making over $100,000 still live paycheck to paycheck [https://www.lendingclub.com/company/press-releases].

These patterns aren’t personal flaws. They’re predictable human responses.

How Different Generations Experience the Psychology of Spending

While the core emotional drivers behind money behaviors are universal, the way we experience them often reflects the generation we belong to.

🔹 Baby Boomers (born ~1946–1964)

Boomers tend to value security and long-term financial stability, shaped by the post-war economy and the rise of employer pensions.
They’re less likely to use budgeting apps but may be more disciplined with savings. However, rising healthcare costs and supporting adult children can lead to late-life emotional spending or financial anxiety.

🔹 Gen X (born ~1965–1980)

Often called the “forgotten generation,” Gen Xers came of age during economic uncertainty and tend to be financially cautious—but carry high debt loads.
📊 According to Experian, Gen X carries the highest average credit card debt of any generation (~$8,134 in 2023).
They are particularly vulnerable to present bias—balancing college savings, retirement, and daily life expenses at once.

🔹 Millennials (born ~1981–1996)

Millennials came of age during the Great Recession and student loan crisis, which heavily shaped their money mindset.
📊 72% of Millennials say financial stress affects their mental health (CNBC + Acorns, 2023).
They’re highly digital but also more prone to emotional spending and lifestyle creep, driven by social media comparisons and a desire for experiences.

🔹 Gen Z (born ~1997–2012)

The youngest generation is incredibly financially aware—but not immune to impulse. They favor loud budgeting and transparency, often talking openly about money online.
📊 54% of Gen Zers report tracking their spending weekly, but 39% say they’ve made purchases they instantly regretted, often influenced by TikTok or influencer trends (Morning Consult, 2023).

How to Make Budgeting Feel Less Emotional

Budgeting often fails because it becomes a battlefield of shame and restriction. But what if it became a tool for financial mindfulness instead?

Here’s how to shift the script:

✅ Use Categories That Reflect Your Values

Instead of “Entertainment,” try “Things That Make Me Feel Alive.” Labeling expenses in a value-based way makes spending more intentional.

✅ Track First, Then Judge

Track your spending for a month without changing anything. Awareness is the first step—guilt comes second (and usually isn’t helpful).

✅ Make Room for Emotions

Don’t eliminate emotional spending. Plan for it. Allocate money toward “joy,” “comfort,” or “celebration” so that you can embrace your feelings without sabotaging your finances.

✅ Use the Right System

Choose a method that matches your personality. If you’re detail-oriented, try zero-based budgeting. If you prefer flexibility, the 50/30/20 rule offers structure without rigidity.

Final Thought: Rational Money Is Still Emotional

The biggest lie in personal finance is that money is just numbers. In reality, it’s identity. It’s power. It’s safety. It’s emotion.

“Your spending is a reflection of your inner world—not just your outer income.”

Behavioral finance helps explain why we behave the way we do—and how we can build habits that honor our emotions without being ruled by them.

So the next time your budget feels “off,” don’t just tweak the numbers. Look deeper. Ask yourself what you’re feeling—not just what you’re buying.

That’s not weakness. That’s self-awareness.

Why I Track Every Dollar—A Practical Approach to Money Management

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I don’t track my spending because I’m broke.
I track it because I’m deliberate.

At some point in my late 20s, after paying off a small mountain of student loans and getting my first “real” job, I stopped living paycheck to paycheck. And yet, something strange happened: I still had no idea where my money went. I’d check my bank account mid-month and think, “Did I really spend that much already?”

That’s when I started tracking every dollar—not just budgeting, but actively managing my money like it was a system to understand, not just survive.

This article isn’t about financial emergencies or scraping by. It’s about money management as a mindset—even when you’re “doing fine.”

The Psychological Case for Tracking Your Spending

Before we talk spreadsheets or apps, let’s talk about your brain.

A 2023 study from the National Endowment for Financial Education found that 65% of Americans say money is their top source of stress—more than work, health, or relationships. But here’s the twist: those who actively track their expenses report significantly lower stress levels, regardless of income.

This isn’t about how much you earn. It’s about how in control you feel.

“Tracking your spending isn’t about restriction—it’s about clarity,”says psychologist and financial behavior expert Dr. Brad Klontz. “Most financial anxiety comes from the unknown.”

When you track every dollar, that fog starts to lift. You begin to see where you overspend without guilt, where your values align (or don’t), and where a little change could free up a lot of room.

Where the Money Goes: Americans are Still Guessing

According to a 2023 Intuit Mint survey, 62% of U.S. adults admit they don’t know exactly how much they spent last month. Yet most believe they’re “good with money.”

The average U.S. household spends:

  • $7,000/year on food outside the home
  • $2,200/year on subscriptions (streaming, gyms, apps, etc.)
  • $5,500/year on transportation (gas, insurance, rideshares)

(Source: Bureau of Labor Statistics, Consumer Expenditure Survey)

These numbers might sound familiar—or shocking. But unless you’re tracking it, how would you really know?

The First Month I Tracked Every Dollar: What I Learned

Let’s be honest: tracking every transaction sounds tedious. I thought so too.

But here’s what I found after 30 days of writing down every cent:

  • I spent $130 on coffee—but only drank half of it
  • I was still being charged $24/month for a digital newspaper I didn’t read
  • My “miscellaneous” category—everything from takeout to last-minute gifts—was eating up 18% of my budget

I wasn’t broke. I just wasn’t paying attention.

Once I saw the pattern, I didn’t feel the need to cut everything—I just made better decisions. I kept the coffee (with joy), canceled the newspaper, and gave “misc” an actual limit.

Budgeting vs Tracking: What’s the Difference?

Many people confuse budgeting with tracking. They’re related—but not the same.

BudgetingTracking
Planning where money should goSeeing where money actually goes
Often monthly, forward-lookingDaily or weekly, backward-looking
Can be rigid or idealisticUsually reality-based and revealing

Tracking is the diagnostic tool. Budgeting is the treatment plan.

How I Track (Without Going Crazy)

There are endless ways to do this—apps, spreadsheets, journals. What matters is consistency, not complexity. Here are a few methods worth trying:

1. Spreadsheet Simplicity

A basic Excel or Google Sheets setup can work wonders.
Just four columns: Date, Category, Amount, Notes.

2. Budgeting Apps

Some top-rated tools for expense tracking and money management include:

  • YNAB (You Need A Budget) – great for zero-based budgeting
  • Tiller – syncs your spending into Google Sheets
  • Copilot – beautifully designed and AI-assisted
  • Monarch Money – built for households
  • Lunch Money – perfect for tech-savvy solo users

Most offer free trials. Find the one that feels natural.

3. The Notebook Method

Old school? Yes. But writing down what you spend with your hand makes it real. Even just for a week.

Budgeting Styles That Actually Work

If you’re tracking consistently, you’ll naturally start to budget more intentionally. Here are a few of the most effective methods:

🔹 Zero-Based Budgeting

Every dollar gets assigned a job—nothing left unallocated. It’s structured, but powerful.

🔹 50/30/20 Rule

Popularized by Sen. Elizabeth Warren:

  • 50% to needs
  • 30% to wants
  • 20% to savings or debt

Great for people who want structure without micromanaging.

🔹 Cash Stuffing (Envelope Method)

Yes, it’s made a comeback—especially among Gen Z. Physical cash is divided into categories. No envelope = no spending.

Each method has trade-offs. Try one. Tweak it. Make it yours.

The Rise of Loud Budgeting (and Why It Matters)

One of the biggest trends in 2024? Loud budgeting.

Popularized on TikTok, it’s the opposite of “treat culture.” Loud budgeting means saying things like:

  • “I’m skipping dinner out—I’m tracking my goals this month.”
  • “Not in my budget, but let’s find something else.”

It’s about normalizing financial boundaries, not pretending you’re endlessly available for $17 cocktails and group trips.

Loud budgeting makes it socially acceptable to care about your finances—out loud.

Why I Still Track, Even When Things Are Fine

These days, my finances are in better shape than ever. But I still track every dollar. Why?

  • Because I value clarity
  • Because I want to be aligned with how I spend
  • Because money, left unmanaged, tends to evaporate

Most importantly, I track because I want my spending to reflect my priorities—not my impulses.

“Money management is less about control and more about awareness. It’s not about deprivation. It’s about direction.”

Final Thought: You Don’t Need a Crisis to Be Intentional

There’s a myth that only broke people budget. Or that tracking is for people in “fix-it” mode.

But what if it’s just… wise?

You don’t wait until your car is falling apart to check the oil. You don’t wait until you’re injured to start exercising. So why wait until money is tight to understand where it’s going?

Start small. Track for a week. Then two. Then a month. You might be surprised—not by how much you’re spending, but by how much better you feel once you know.

That’s not about control. That’s about peace of mind.

Average Retirement Savings by Age: Are You on Track at 30, 40, or 50?

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Why These Numbers Stress People Out

“How much to save for retirement?” This is a question most people don’t ask out loud—but think about all the time. You might see a headline claiming you need six figures saved by your 30s and wonder if you’re hopelessly behind. Or maybe you’re doing okay, but you’re still unsure if it’s enough.

According to the Federal Reserve’s 2023 Survey of Consumer Finances, nearly 1 in 4 U.S. adults have no retirement savings at all. For Americans between 35 and 44, the average retirement savings by age is about $60,000—a number that might feel encouraging or terrifying, depending on your own situation.

But numbers without context don’t help much. This guide unpacks the most widely accepted savings benchmarks, explains how everyday people are actually doing, and offers real, actionable steps—whether you’re ahead, behind, or just getting started.

Why Do These Benchmarks Exist in the First Place?

The idea of having a certain amount set aside by a certain age isn’t new—it comes from the financial planning industry, where firms like Fidelity, Vanguard, and others aim to provide simple goals to help individuals gauge progress.

They’re based on some core assumptions:

  • You’ll retire around age 65–67
  • You’ll want to replace about 70–80% of your pre-retirement income
  • You’ll live until your mid-80s or beyond
  • Your investments will grow by 5–7% annually, adjusted for inflation

These assumptions lead to the common advice that your retirement savings plan should be structured around certain income multiples at key age milestones.

The Most Commonly Cited Retirement Benchmarks by Age

AgeRecommended Savings Target
301x your annual salary
403x your salary
506x your salary
608–10x your salary

Example:
If you make $60,000/year. Your recommended savings target is:

  • By 30: $60,000
  • By 40: $180,000
  • By 50: $360,000
  • By 60: $480,000 to $600,000

On paper, these numbers make sense—especially when thinking about the power of compound interest over time. But in practice, not everyone has the stability, income, or early start to hit those targets.

What the Average American Has Saved (And Why It’s Less Than You Think)

Here’s a look at the average retirement savings by age, using the latest available data:

Age RangeMedian Savings (Households)
25–34$18,880
35–44$60,000
45–54$100,000
55–64$134,000

(Sources: Federal Reserve; Transamerica Institute)

Keep in mind: these are median numbers, meaning half of people have less than this. It’s far below the benchmarks from financial institutions. But this doesn’t mean people are lazy or irresponsible.

The gap exists for many reasons:

  • Stagnant wage growth over the past two decades
  • Student loan debt delaying saving for retirement
  • Rising housing and healthcare costs
  • Job instability, gig work, and caregiving duties

In fact, 27% of Americans over age 45 now expect to either work past 70 or never fully retire. Not because they want to—but because the systems built for previous generations don’t align with today’s economic reality.

Why It’s Okay If You’re “Behind” the Average Retirement Savings for Your Age

Let’s be clear: falling short of these benchmarks doesn’t mean you’ve failed. Many people make up ground later in life, especially as expenses like childcare and rent decrease, or income increases with experience.

Plus, most retirement calculators and plans don’t account for:

  • Spouses or partners with income
  • Pensions, inheritances, or other assets
  • Changes in retirement age or lifestyle expectations

In other words, a retirement savings plan should be tailored—not templated. If you’re saving steadily now, that consistency will matter far more than whether you hit a target by your 35th birthday.

What To Do If You’re Feeling Behind

It’s never too late to start. And it’s never too early to adjust. Whether you’re 32 or 52, the same principles apply: focus on small wins, automate progress, and let time work in your favor.

1. Define What Retirement Means to You

Does it mean fully stopping work at 65? Working part-time until 70? Moving somewhere cheaper? You can’t figure out how much to save for retirement if you don’t know what you’re saving toward.

2. Use Simple Tools to Estimate Your Gap

A calculator from Vanguard, Empower, or NerdWallet can give you a clear (and quick) picture. This step alone removes a lot of the guesswork from saving for retirement.

3. Automate Your Contributions

One of the most effective ways to start or scale up is to automate. If you’re wondering how to save for retirement, start by removing the decision fatigue: let it happen in the background.

4. Start Small—and Then Grow

A $100 monthly contribution may not feel like much, but with compounding, it grows significantly over time. As you earn more, aim to increase your contributions by 1–2% annually. That slow ramp-up can double your results over a decade.

5. Take Advantage of Employer Matching

It’s shocking how many people leave this on the table. If your employer offers a match on a 401(k), always try to contribute at least enough to get the full benefit. It’s free money toward your future.

Beyond Retirement: Building a Bigger Financial Picture

A healthy retirement savings plan is just one part of your financial life. You might also be:

  • Paying off student loans
  • Raising kids
  • Starting a business
  • Supporting family
  • Saving for a home

None of these goals exist in isolation—and sometimes saving for the future takes a back seat to urgent needs today. That’s okay. The goal is to stay aware and intentional. Even when you’re not saving as much as you’d like, the habit of checking in regularly builds lifelong financial resilience.

Final Thoughts: Progress Over Perfection

When you Google “how much to save for retirement,” you’ll get articles filled with numbers, acronyms, and panic-inducing charts. But here’s the truth: no number defines your worth, and no missed target means you’re too far gone.

“Benchmarks are helpful—but they don’t know your story. The best savings plan is one you can actually stick to.”

Whether you’re just getting started, catching up, or cruising steadily ahead, your path is still valid. Stay consistent. Stay informed. And most of all—stay kind to yourself.