By the time your 30s arrive, you’ve probably settled into an adult life. But you haven’t really fully embraced “adulting” unless you’ve started saving for retirement. Whether it’s through an employer-sponsored retirement plan or some other financial product, the time to start planning for the end of your working days is now. Even if it seems like retirement is just a distant dream, you’ll want to get started now to make sure you and your family are secure when you’re ready to stop working. With that in mind, here is a guide for how to invest for retirement at age 30. No matter your age, consider working with a financial advisor to help you plan your future.
How Much You Should Have Saved at 30
There isn’t a hard-and-fast rule as to how much money you should have set aside for retirement at 30. You are at the age, though, when you should start thinking about what you want your life to look like as you get older. Do you see yourself having kids? Would you like to travel when you’re older? Are you going to retire as soon as humanly possible, or are you in the type of industry where you might want to work into your old age?
Once you’ve figured out these questions, you should have a better idea of what your retirement will be like. A retirement calculator can help you figure out how much money you’ll need to have saved for retirement and show you if you’re on track or not. Once that’s done, you can see what adjustments you need to make in order to meet your goals.
What to Do If You Have No Retirement Savings
First off, don’t despair. Sure, it would be great if you already had a healthy nest egg to get your retirement savings going. But you’re still young and you’ve got plenty of time to make up the gap – provided you get serious about saving for retirement right now.
You need to immediately look at what investment opportunities you have available to you. If you work somewhere with an employer-sponsored retirement plan like a 401(k) or a 403(b), enroll right away. Does your employer offer a company match? Even better. Make sure you’re investing at least enough to take full advantage of the match – that’s literally free money your company is giving you to invest for your future. If you’re company doesn’t have a retirement plan, look at other options. Consider opening an individual retirement account (IRA).
No matter what type of plan you use, it’s important you put aside as much money as you can afford. You might not be able to put aside the maximum allowed yearly contributions, but look at your finances and see if there are any areas you can cut back on in order to contribute more to your retirement. It might mean a few less meals out or canceling some subscription services, but it will help ensure you can afford to live the comfortable life you want when your retired.
How to Invest for Retirement at Age 30
Again, you’re in luck. At 30, you aren’t so close to retirement that you need to be incredibly conservative in your investment strategies. Experts generally agree that you’ve still got a enough time left before retirement, that you can be more aggressive than you would be if you were 50 and saving for retirement. Look at the options offered by your retirement plan and create a mix of investments. Some experts suggest keeping some of your money in less risky investments like index funds or bonds, while investing other money in stocks or other options that offer a bit more risk. The thinking behind this is that you might suffer some short-term losses, but in the long run there is a better chance that these investments will give you the healthy returns you want to fund your retirement lifestyle.
401(k) Plans and Retirement Savings in Your 30s
A 401(k) plan is a workplace retirement savings plan that many companies offer to their employees. It works like this: you put money into the account before it is taxed and put it in a variety of investment vehicles, generally funds investing in stocks or bonds. Some companies also offer a 401(k) match for some or all of the money you deposit — basically, free money.
For many people, a 401(k) plan is the best way to invest for retirement. Make sure to choose aggressive investments in your 30s, while you can afford to. If you can, invest at least as much as your company match policy, taking advantage of the free money. If your company doesn’t have a 401(k), consider an individual retirement account.
The Bottom Line
You’re 30. Hopefully you’ve settled into a career and are ready to start to think about the future beyond what you’re going to do this weekend. Part of that is planning for retirement. Do an honest assessment of what your retirement goals are and whether or not your on track to meet them. Start investing in a retirement plan, and if your company has a 401(k) match, invest at least enough to get everything out of that. You definitely don’t need to panic, but the time to save for retirement is now.
Retirement Investing Tips
- Enlist a professional: A financial advisor who specializes in retirement can help you take stock of your finances and create a plan for your financial future. SmartAsset’s free financial advisor matching tool can connect you with financial advisors in your area. First you’ll answer a series of questions about your situation and goals. Then the program will narrow down your options from thousands of advisors to up to three registered investment advisors who suit your needs. You can then read their profiles to learn more about them, interview them on the phone or in person and choose who to work with in the future. This allows you to find a good fit while the program does much of the hard work for you.
- Social Security: Social Security may not be able to completely fund your retirement, but every dollar counts. A Social Security calculator can help you see how money you can expect to receive in retirement.
- Taxes matter: Yes, you’ll still be paying taxes in retirement. But how much will depend on what state you live in. Some states are much more friendly for retirees than others when it comes to taxes. This page provides a good overview of retirement taxes by state.
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