Rachel Cruze flags critical retirement mistake people make in their 20s

23 Sep 2026, 14:07 · The Fresno Bee

Your 20s feel like the worst possible time to lock money away for a goal four decades out. Between rent, entry-level salaries, and the novelty of a regular paycheck, long-term investing barely registers as a priority for most young workers.

The biggest financial misstep workers in their 20s make is failing to think about the future with their money, Rachel Cruze, a two-time bestselling author and co-host of “The Ramsey Show” at Ramsey Solutions, told People.com.

Consistent monthly contributions to a Roth Individual Retirement Account (IRA) can compound toward millionaire-level wealth over a full career, she noted in the interview.

Survey data from Thrivent and Northwestern Mutual confirmed that present-day bills continue to crowd out long-term savings for working Americans across every generation. Both firms’ 2026 studies found sharp gaps between the retirement outcomes workers expect and the savings habits they are building.

How small Roth IRA contributions compound over decades

The 20s offer something no later decade can replicate: time for tax-free growth to multiply even small contributions, Cruze emphasized. Putting $200 a month into a Roth IRA qualifies as forward-looking behavior that most young savers skip, she told People.com.

The 2026 Roth IRA contribution limit stands at $7,500 for savers under 50, the Internal Revenue Service (IRS) confirmed in Notice 2025-67. Those aged 50 and older can contribute up to $8,600, and a $200 monthly deposit amounts to $2,400 per year, below either ceiling.

A 25-year-old contributing that amount and earning the S&P 500’s long-run historical average of about 10% annually would accumulate roughly $1.26 million by 65, based on standard compound-growth projections.

Roth IRA contributions go in after tax when income and brackets tend to be lowest, and qualified withdrawals come out tax-free in retirement.

Everything in your twenties feels “so new and exciting,” which can push saving to the back of the line, Cruze said in the interview.

Taking care of one’s “future self” should drive saving in one’s twenties, Cruze said, framing the goal as ensuring the 60-year-old version of a saver would “come back in time and hug the 20-year-old version.”

Thrivent and Northwestern Mutual data reveal a widening savings gap

The share of non-retirees who doubt they will ever fully retire reached 47% in 2026, Thrivent’s Retirement Expectations Survey found. More than a third also reported feeling behind their peers, driven by high living costs and insufficient income to save, the survey noted.

The so-called retirement “magic number” climbed to $1.46 million in 2026, up more than 15% from the prior year, Northwestern Mutual’s Planning and Progress Study found. Nearly half of all respondents said they believe it is somewhat or very likely they will outlive their savings, the study reported.

More Retirement:

Starting to save at an early age was the top reason non-retirees felt ahead of their peers, cited by 60% of that group, Thrivent’s survey found.

That finding reinforces Cruze’s call to start consistent Roth IRA contributions in one’s 20s, before competing financial priorities take over.

Artificial intelligence, rising costs, and economic uncertainty are adding new pressure to how Americans think about work and retirement, Thrivent’s survey also found. Gen Z and millennials reported the highest levels of concern about the long-term financial impact of those forces.

Jelena Stanojkovic / Getty Images

Why the compounding advantage shrinks with every year of delay

Americans begin saving for retirement at an average age of 31 and expect to retire at 65, giving them a 34-year window to build their savings, according to Northwestern Mutual’s study.

Gen Z is getting an earlier start: they begin saving at 22 and expect to retire at 61, giving them a 39-year runway, the longest of any generation.

John Roberts, Executive Vice President and Chief Field Officer at Northwestern Mutual, noted in the firm’s 2026 study that retirement now lasts 30 to 40 years for many Americans, leaving delayed savers less time for tax-free growth and a longer withdrawal period to fund.

As people plan to live longer, their money needs to work longer, too. Planning for longevity isn't just about accumulating more, it's about building a strategy that can sustain income, manage risk, and adapt over time,

A saver who starts at 22, saves $200 a month, and earns 10% annually would accumulate roughly $1.7 million by 65, based on standard growth projections.

The same habit beginning at 31 would produce about $684,000 over that timeline, a gap exceeding $1 million from just nine years of inaction.

What Roth IRA compounding means for savers still in their twenties

Cruze’s core argument, reinforced by data from both Thrivent and Northwestern Mutual, centers on a tradeoff that young earners face each month.

Northwestern Mutual’s data shows that every dollar invested in a Roth IRA at 25 can benefit from four decades of tax-free compounding, a head start that catching up at 45 cannot fully replicate.

The longer someone waits to save, the more of that compounding advantage they lose, making time especially hard to recover through larger contributions later.

A $200 monthly contribution only needs to be consistent enough to give long-term growth a meaningful head start, Cruze said to People.com.

Each 20s saver still has to decide whether the version of their life at 65 justifies the monthly sacrifice they can lock in today.

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This story was originally published September 23, 2026 at 7:07 AM.