A Beginner’s Guide to Saving for Retirement

While retirement may seem like a long way off and saving for something so far in the future could seem premature, it’s never too early to get started.

4 min read

Our mission at N26 is to give people the power to live their best financial lives. This includes making smart financial decisions today and saving for tomorrow. While retirement may seem like a long way off and saving for something so far in the future could seem premature, it’s never too early to get started.

We know that planning for retirement can be difficult, sometimes even overwhelming. But N26 is here to support you, and hopefully make your first steps toward retirement and a financially-secure future a little bit easier.

Why is saving for retirement important?

According to the IRS, your life in retirement can last 30 years or more, so it’s important to have enough money saved to live comfortably. In addition to your cost of living, you’ll probably want an extra cushion to cover other wants, needs, and unexpected health care expenses. If you’re really savvy with your savings, you can enjoy all the great perks of retirement like traveling the world or building your dream home.

What’s the big deal about saving at a young age? Even though you may not be making a ton of money (yet), you have the advantage of time on your side, and there are plenty of data-backed reasons that saving early will seriously pay off later.

By assessing your current spending habits, you can determine how much you can afford to set aside for retirement. As your earnings increase throughout your career, you can continue to increase your savings contribution.

What are some common retirement terms?

There are many terms you will encounter when researching retirement savings plans. We’ve created a glossary so you can become familiar with the lingo.

  • 401(k) Plan: An employer-sponsored retirement savings plan that automatically deducts money from your paycheck into your 401(k). At the time of retirement, you will pay taxes when you withdraw the money.

  • IRA: An Individual Retirement Account that is funded with pre-tax dollars. There are limits on how much you can contribute annually. At the time of retirement, you will pay taxes when you withdraw the money.

  • Roth IRA: An Individual Retirement Account that is funded with after-tax dollars. At the time of retirement, you can withdraw the money without paying taxes.

  • Roth 401(k): Similar to a Roth IRA, but an employer-sponsored retirement plan where you can deduct an amount from your paycheck with the taxes paid upfront. At the time of retirement, you can withdraw the money without paying taxes.

  • Required Minimum Distribution: A required minimum distribution is the minimum amount you are required to withdraw from your account at a specific age. Typically, you have to start withdrawing money from an IRA at the age of 70½.

How to get started

There are several ways you can start saving for tomorrow. Some of the easiest and most common ways to save are with 401(k) plans and Individual Retirement Accounts, or IRAs. Both 401(k) plans and IRAs are tax advantaged methods of saving, which means you do not have to pay taxes on the funds you are contributing. When you’re ready to retire, you will be taxed as you withdraw that money. Being able to save tax-free allows you to benefit from tax savings now and delay paying taxes until the funds are withdrawn at retirement.

Many companies sponsor 401(k) plans that allow employees to have money deducted from their paycheck. Because these funds go straight to your retirement savings, you don’t even have the option to “cheat” on your budget. Some employers offer a matching contribution up to a certain percentage. You should take full advantage of the matching contribution because it’s essentially extra money to your plan.

How can N26 help you save for retirement?

If you’re not quite ready to delve into a full-scale retirement savings plan or an IRA at this point in your life, N26 is here to help you get started planning for tomorrow in a way that you control, and at your own pace.

N26 Spaces can be an ideal tool for dipping your toes into saving-for-the-future, helping you put money aside for small and large goals you might have. Here are some of the main benefits you can expect from Spaces:

  • Goal setting – Spaces can help you set spending and savings goals and stick to them. Whether you’re saving for retirement or your next vacation, you can set money aside for whatever your goals are at a pace that makes sense for you. You can move money in or out of Spaces as often as you want — no waiting, no fees.

  • Control and flexibility – Resist the temptation to dip into your savings by locking your Spaces with just a tap. Whenever you’re ready, you can unlock the Space and move the money back to your main account if you need to.

  • A fee-free way to save — There are no account minimums or fees associated with moving money in or out of your Spaces. Whether you move money weekly or twice a year, Spaces lets you work towards your goals in a way that makes sense to you.


N26 helps you control your financial wellbeing. If you already have an account, check out Spaces and start saving for tomorrow today. If you don't have an account, open one today to experience banking that is fast, flexible, and transparent.

The N26 account is offered by Axos Bank®, Member FDIC. N26 Inc. is a service provider of Axos Bank. All deposit accounts of the same ownership and/or vesting held at Axos Bank are combined and insured under the same FDIC Certificate 35546. All deposit accounts through Axos Bank brands are not separately insured by the FDIC from other deposit accounts held with the same ownership and/or vesting at Axos Bank. The N26 Visa® Debit Card is issued by Axos Bank pursuant to a license by Visa U.S.A. Inc. The N26 Visa Debit Card may be used everywhere Visa debit cards are accepted.

By N26

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