Falling behind on retirement savings is the top financial regret for Americans, especially among older individuals, according to a September Bankrate survey. Still, young Americans remain largely optimistic that they’re on track with retirement goals, despite many saying they’d need more than $1 million to do so comfortably. But with 29 percent of Gen Z workers not saving anything for retirement this year or last, they may not have reason to be quite so hopeful if they’re not making smart financial moves today.

Are young Americans simply being way too optimistic, or can they avoid the regrets of older groups such as Gen X, where 69 percent say they’re behind on saving for retirement? By taking steps to regularly contribute toward their retirement accounts now, young Americans can vastly improve their financial security later in life and have the best chance to hit their financial goals.

Young Americans’ retirement goals vs. where things stand today

The good news is that many young Americans say they’re broadly on track with their retirement savings. However, some signs suggest that they’re not saving enough to meet their goals.

Some 45 percent of Gen Z and millennial workers feel at least like they’re on the right track with retirement savings, compared to 26 percent of Gen X and 34 percent of boomers, according to the Bankrate survey on retirement. In fact, 23 percent of Gen Z workers and 21 percent of millennial workers say they’re ahead of where they need to be – a positive sign for starters.

However, Gen Z workers (ages 18-26) have lofty expectations for what they’ll need in retirement, too. With 35 percent saying they’d need more than $1 million to retire comfortably – the highest percentage of any age cohort – they have plenty of saving to do to reach their goals. Following Gen Z in the percentage who felt they needed at least $1 million were 34 percent of millennials (ages 27-42), 31 percent of Gen X (ages 43-58) and 26 percent of baby boomers (ages 59-77).

But a majority of younger workers say they know what they’re aiming for and think they’ll get there. Some 58 percent of Gen Z workers and 62 percent of millennial workers who know how much they’d need to retire comfortably believe that they will be able to reach it. The numbers for older Americans: 40 percent of Gen X and 44 percent of boomers.

Despite this optimism, Gen Z workers form the biggest cohort of non-savers. Some 29 percent did not contribute to their retirement savings this year or last. Millennials came in at 19 percent, Gen X at 21 percent and boomers at 26 percent.

The lack of retirement savings contributes to feelings of insecurity among Americans, with 41 percent of those who don’t feel financially secure citing insufficient savings as a cause. Not surprisingly, the lack of savings also negatively affects well-being, with more than half of Americans saying money worries have hit their mental health, according to a recent Bankrate survey.

5 key steps that young retirement savers can take today

If young Americans want to maintain that optimistic outlook – and avoid the serious negatives of being unprepared for retirement – they have a number of steps that can help accelerate their savings. Here are five things that Americans can do today to put their finances on firmer footing.

1. Start now

It may sound cliché, but it remains undeniably true: Time is your biggest ally when it comes to saving for retirement. Don’t waste your most precious resource by delaying another day on getting your financial future in order. Every year you wait has the potential to put you further behind your savings goal.

The costs of waiting are utterly immense. In round terms, if you have 40 years to compound, you need to set aside just half as much (from paychecks, for example) as if you have 30 years to grow your wealth. That’s the difference between starting retirement savings at age 25 or 35.

But let’s put it in real dollar terms: For a person who starts investing $5,000 annually at age 25 and earns an annualized 8 percent return over a 40-year period, those contributions would turn into $1.295 million at age 65. For the worker who waits just 10 years, until they turn 35, the same contributions lead to just $566,000 or so – a difference of more than $728,000. That’s the cost of waiting a decade!

Bankrate’s retirement calculator can help you figure how fast you can amass your wealth.

2. Understand which retirement accounts are available to you

Whether your employer offers a retirement plan or not, every income-earning American has access to a tax-advantaged retirement plan, allowing you to defer taxes or eliminate them entirely.

Employers typically offer a retirement plan such as a 401(k), which allows you to defer money from your paycheck into your retirement account. You’ll usually be able to invest in high-return investments such as mutual funds, and your earnings will be tax-deferred in a traditional 401(k) or withdrawn tax-free in retirement with a Roth 401(k). That means you won’t be taxed on any returns as they accumulate.

Another great part about these employer-sponsored accounts is the potential for an employer match when you save. For instance, your employer may contribute a certain percentage of your annual salary if you contribute, making it easy to ramp up your savings.

For those with or without an employer plan, an IRA provides a tax-advantaged account for anyone with earned income (and even their spouses). You can open a tax-deferred traditional IRA or a Roth IRA – the experts’ top pick – and invest in high-return assets such as mutual funds.

Each plan has a variety of rules and limitations, so be sure to understand them thoroughly.

3. Optimize those retirement accounts

After you’ve set up your retirement accounts, it’s time to maximize them to get the best benefits.

The biggest and best benefit is the employer match, which can get you free money and an automatic return just for doing something that’s great for your long-term financial health. Experts routinely advise workers to capture every bit of that free money each year.

Many employer retirement plans allow you to step up your contribution automatically each year so that more comes out of your paycheck. That’s an easy way to set your savings on autopilot.

If you’re really looking to max out your retirement accounts, the contribution limit on 401(k)s (for 2023) is $22,500, with those age 50 and over able to save an extra $7,500 in catch-up contributions. Those using an IRA can sock away $6,500 each year (in 2023), and the 50-and-over set can put in an additional $1,000.

And it’s almost as important to understand that you can contribute to both an employer plan and an IRA, meaning you can really rack up the retirement savings.

4. Make sure your account isn’t too conservative or aggressive

You’ll also want to be sure that your investments are geared to when you might need them for retirement income.

Investment portfolios or funds that are heavy on stocks are called aggressive, while those that are heavy on bonds are called conservative. Those somewhere in the middle are balanced. Aggressive portfolios tend to perform better over time, while experiencing significant volatility along the way. Meanwhile, conservative portfolios can be expected to deliver lower returns but fluctuate much less.

Financial advisors routinely advise those with long time horizons – think a decade or more – to maintain fairly aggressive portfolios, sometimes even all-stock portfolios. As you approach retirement, however, you’ll need more security, and so it’s important to dial back the risk.

Working with a financial advisor can help you make these kinds of investment decisions.

5. Find an investment plan that works and then stay the course

Maybe the hardest part of investing for the future is to find a plan that works for you and then stick to it through thick and thin.

If you’re contributing to your retirement accounts regularly and are looking to retire in a decade or more, you don’t need to constantly check your portfolio and you don’t need to try to dodge the market’s down times. Study after study shows that passive investing beats active investing over time. In fact, if you try to trade on a short-term basis, you’ll likely underperform massively.

So, find a long-term investment strategy that works – such as stock index funds – and then stick to it. You’ll be tempted to stop investing when the market gets rough, but that’s likely to be the time when you’re going to find the best bargains. If you take a long-term mentality, you can begin to see downturns in the market as potential opportunities rather than risks.

Bottom line

Many young Americans say they’re optimistic now about their financial future, but if they fail to take concrete steps to make it secure, they may wind up like the majority of Americans who feel behind on their retirement savings. The best path forward for young Americans is to use their biggest ally – time – and let the magic of compounding build them wealth over many years.

Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.