The Two Things Recent College Graduates Should Do Now to Secure Their Financial Future

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Recent graduates who open a retirement account and start investing in their early 20s give compounding a head start that higher earners decades later can rarely catch.

Luke Delorme, a certified financial planner, made that case in a recent note for the Center for Retirement Research at Boston College. New graduates should begin contributing to a 401(k) or IRA now, and invest aggressively in the stock market while they have time on their side, he said.1

Recent college graduates are entering an unstable labor market and economy. It can be difficult for young workers to budget and set money aside for investments. However, putting aside even small amounts early will give your money time to compound into much more over the long term.

The first advice from Delorme is to begin contributing to your retirement as soon as possible.

Almost 60% of Americans say they have money invested in a retirement plan, but only about 40% of those aged 18 to 29 do, according to a 2025 Gallup survey.2

Although Gen Z workers are still behind on their retirement savings, they are doing better than older generations did at the same age. The average Gen Z worker (born 1997 to 2012) began saving for retirement at age 22, 10 years sooner than the average Gen Xer (born 1965 to 1980), according to a survey from Northwestern Mutual.3

Saving for retirement has become more important for younger generations, as pensions—employer-paid retirement income tied to a worker's salary and tenure—have faded from American workplaces. According to the Federal Reserve's annual report on Americans' economic well-being, 52% of workers ages 65 and older have a pension. Only 5% of workers ages 18 to 24 and 20% of those ages 25 to 54 do.4

Meanwhile, the Social Security safety net could weaken for younger workers. Social Security's main retirement trust fund is projected to run out in 2032, after which point scheduled benefits would be cut by about 24% unless Congress acts.5

The second tip Delorme provides is to invest early and invest aggressively in the stock market. Over the long term, the U.S. stock market has had an annual return of about 10%. Already in 2026, the benchmark S&P 500 index has gained 10% and hit a series of records, while the Dow Jones Industrial Average and Nasdaq Composite have also traded at all-time highs.

Many young workers are already investing The median middle-class Gen Zer began saving for retirement earlier than any previous generation, at age 22, according to a Northwestern Mutual survey.6

Younger investors have easier access to online investing tools and advice, a 2024 World Economic Forum survey found, and Gen Z and millennial investors are more willing to share financial data with AI tools and social platforms for guidance.7

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