For young adults in their 20s, retirement seems light years away. And for many, they aren’t in the financial position to sock away a good portion of their paycheck for something that doesn’t occur for at least three decades. Incomes are low, debts tend to be high.

But this young generation should take heed from the current baby boomer generation that, for the most part, has saved nowhere near the amount they need to retire. More than half of all workers report they have less than $25,000 in savings, according to a survey by the Employee Benefit Research Institute. This shortfall should serve as a reminder that planning for retirement should start early to build up an ample financial cushion along the way.

Leaving the working world might be the last thing on young workers’ minds—after all, they just entered it--but studies show that the advantages of starting early and figuring the amount you need to save each month can really pay off--but how much is enough?

According to a recent study compiled by the Center for Retirement Research at Boston College, Gen Y savers can figure out their target replacement rate, used to estimate the amount of pre-retirement spending that a person can maintain once they stop working, to help determine how much they should save.

The amount that a person needs to save for retirement depends on a variety of factors: income level, rate of returns on investments, the age they start saving and their desired retirement age. The later you retire, the lower the required saving rate.

Calculating required saving rates

The Center for Retirement Research at Boston College’s study breaks down how much young workers should save starting at age 25, assuming they’re a lower-income earner with a 4% rate of return:

To retire at 62: Save 18% of pay

To retire at 65: Save 11% of pay

To retire at 67: Save 8% of pay

To retire at 70: Save 3% of pay

To see what a difference that even 10 years can make, here are the numbers when saving starts at 35:

To retire at 62: Save 28% of pay

To retire at 65: Save 17% of pay

To retire at 67: Save 12% of pay

To retire at 70: Save 4% of pay

This shows that lower earners can have pretty manageable saving rates if they start early and are able to push back their retirement age a few years.

With this in mind, here are some tips from finance and investment experts on how Gen Y can meet their retirement goals.

Establish an automatic retirement savings plan. It’s hard for younger workers to miss money when they don’t even see it. “You can automatically deduct a specific dollar amount from your bank account to a mutual fund,” says Matthew Young, president and CEO of Richard C. Young Co.“This ensures that monthly investing is taking place--an absolute must.”

Participate in your retirement options at work. If an employer offers a savings plan such a 401(k), take advantage of it. Employees can make pre-tax contributions automatically from their paycheck—no taxes have to be paid until funds are taken out of the account.

“Many employers will match a portion of your contributions, essentially giving you free money–another powerful incentive to start saving,” says president of Security Financial Resources and senior vice president of Security Benefit Kevin Watt.

Maintain your retirement vehicle. Watt explains that although young investors may not see the harm in cashing out a low-balance 401(k) or IRA before retirement, doing so will increase their taxable income, giving Uncle Sam a good portion of their earnings on top of taking a substantial penalty for early withdrawal.

“Keep in mind that a 401(k) balance of only $2,500 will accumulate to more than $27,339 in 30 years assuming an 8% return--that’s a good chunk of change,” says Watt. 

Young workers change jobs—but they should roll over their retirement savings into a new employer’s retirement plan or an IRA rather than withdrawing prematurely.

Reflect on your goals annually. Gen Y worker should evaluate their retirement goals periodically to make sure they are still on track and make any necessary adjustments.

“Come up with a plan for yourself for that year--based on who I am today, this is what I want and this is what I will do,” says Chad Parks, CEO and founder of The Online 401k. “Ask yourself the same questions [next year] and see if anything has changed.”