We’re 37 and got a late start on retirement savings. How much should we aim to save now?

You’ll usually hear that it’s important to start saving for retirement from as young an age as possible. The more years you have to earn returns on your money, the larger a nest egg you’re likely to end up with.

But sometimes, life can get in the way of retirement savings — especially when you’re young and perhaps aren’t earning the most generous salary.

That’s the situation the couple in this Reddit post is in. They’re 37 years old and spent years living as artist types who presumably did not earn a lot of money.

However, now the wife is graduating from veterinary school. Once she starts working, she’s expected to command a nice salary. And that could help the couple not only pay off the debt they’ve accrued to date, but start saving meaningfully toward retirement.

The couple wants to know how much money they should aim to start saving to be able to retire on time.

It’s a tough question. And the answer might boil down to “do your best.”

The general convention for retirement savings

People are generally told to aim to save 15% to 20% of their income for retirement. That doesn’t mean that’s a reasonable goal, though.

If the couple in this post has a lot of debt (which they may have given that the wife just went to veterinary school), it’s going to eat up a lot of their income. They may not be able to save more than 5% to 10% of their earnings comfortably — at least not at first.

Of course, the more this couple is able to save, the better off they stand to be once retirement rolls around. But they also have to take a reasonable approach to building their nest egg.

While they did miss out on a number of years of savings, they’re also by no means old. They say they’d like to be able to retire by age 65, which gives them almost 30 years to build up a decent nest egg.

If they begin setting money aside for retirement right away, they may be able to retire comfortably even if they never manage to set aside 15% to 20% of their pay or more. And they also shouldn’t sacrifice every single comfort in the near term to be able to fund their nest egg. Doing so might make them miserable and cause them to give up on savings, period.

The right investment strategy could make a big difference

Given that this couple is new to retirement savings, their best bet may be to start by setting a small monthly savings goal and then work their way up from there.

But saving is only part of the equation. It’s just an important to invest wisely for retirement.

If this couple wants their money to grow, they should load their retirement portfolio with stocks. Though there’s risk in this approach, they’re young enough to be able to take on that risk.

However, they should do so carefully by diversifying their holdings. If they don’t know much about investing, an S&P 500 ETF could be a good starting point.

The couple should also realize that with a stock portfolio, even small monthly contributions to an IRA or 401(k) could grow into a lot of money over time.

If they manage to save $500 a month for the next 28 years, and their portfolio generates a 9% annual return, which is fairly in line with the stock market’s average, then they stand to accumulate about $678,000 for retirement.

Meanwhile, the couple mentions that they live in a state with relatively low living costs. If they stay put during retirement, a $678,000 nest egg could end up being more than enough money, especially if they become mortgage-free at that point and also have some income from Social Security.

One thing the couple here may want to consider, though, is sitting down with a financial advisor. Although they’re not getting such a terribly late start on retirement savings, they do have a bit of work to do to make up for years of not saving.

A financial advisor can help them establish a realistic monthly savings goal based on their new combined income, as well as help them choose investments that are likely to lead to strong returns over time.

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