How to Start Saving for Retirement When You’re 30

At 30, people tend to have more responsibilities piled up. They are likely to buy their first home and grow their family. Marriage, mortgage, and extra mouths to feed can drain earnings. It’s easy to imagine that retirement savings are impossible in your 30s, but it should remain a top priority, especially as pay increases. You will need to work harder to balance spending with saving.

How to Plan for Retirement While You are in Your 30s

When a person is in his 30s, perhaps only a handful of years into their career, planning for their life as a retiree may seem like a distant goal and one without many urgencies. But the reality is that many people need substantial income to maintain a comfortable lifestyle, and building that lifestyle is easier when they start young.

But How do People Know if They Are on Track?

While everybody’s situation is different, looking at recommended retirement savings by age can be a helpful way to measure people’s progress.

Below are some of the investment vehicles that can help maximize return:


401(k) is a great place to start, partly because of significant tax advantages. The money people contribute to the plan is made from pre-tax wages, and their contributions and earnings accumulate tax deferred until they withdraw after age 59½. When they are eligible for withdrawals in their plan, any funds they pull from the plan are taxed at their ordinary rate—much like their earnings are taxed today. If people want to retain their tax deferral, consider rolling their assets to an IRA.

Roth 401(k)

If the employer offers it, a Roth version of the 401(k) can be more advantageous for younger employees. While their contributions to the plan are made with after-tax dollars, they are not taxed when they make qualified distributions in retirement. Most thirty-year-olds haven’t yet hit their earnings peak, so people may be better off paying taxes in a lesser tax bracket.

IRA or Roth IRA

Even if people don’t have access to a retirement plan at work, they can still reap similar tax advantages with a Roth IRA or a traditional IRA. The contribution limit on these accounts is lesser; people can kick in up to $6,000 in the year 2022, as opposed to employer retirement plans with higher contribution limits—although people can invest any additional money through a taxable brokerage account.

Here Are 7 Easy Steps to Start Saving for Retirement When You’re 30

Ramp up 401(k) Savings

Ideally, people will make the maximum contribution each year to an employer-sponsored fund, such as a 401(k). For the year 2021, that’s $19,500. As people move up the career ladder, they put raises into their retirement savings instead of spending them.

If they can’t afford to stash all of their pay increases into retirement funds, increase contributions over time, advises CFP and author of “The Complete Idiot’s Guide to 401(k) Plans “Dee Lee.”

“Let’s say people have got 3% in their 401(k) to qualify for the company match. Add a bit more. Then maybe add another % of their salary a few months later, so eventually, they are saving 10 to 15% of their income,” Lee says. “They won’t miss the money if they increase their saving slowly.”

Open an IRA

If you are already putting as much as possible into a 401(k) or another employer-sponsored fund, pat yourself on the back and open a separate IRA.

In 2021, people under age 50 can save up to $6,000 in a traditional IRA or Roth IRA.

However, the Roth IRA has a contribution limit. If people don’t yet qualify for the 401(k), look at the traditional IRA. It has no income requirements as long as they are not enrolled in an employer-sponsored retirement plan. They get a tax deduction for their contribution, and earnings grow tax-deferred, which means you pay income taxes when you withdraw your money.

Maintain an Aggressive Asset Allocation

It’s not enough to save, and you also need to keep an eye on existing retirement assets to ensure you’re not squandering growth opportunities.

People in their 30s must invest aggressively, allocating 80 to 90% of assets to a diverse array of stocks. Individuals need to stay focused on their goals during market volatility. Equity markets rise and fall, and declines are tough but normal.

“Young people can weather a setback and wait for a rebound.” They can set it and forget it within reason. Then the market will be good to them for the long-term.”

Keep the Company Stock in Check

People should not fall into the trap of not paying attention to their assets, including stock, in the company they work for. If their shares in the company have done well, they may make up a big chunk of their retirement investments.

Financial planners agree that company stock, or any other single equity, should never exceed 10 percent of their portfolio. More than that, they may be putting their retirement at great risk. “The health of a single company shouldn’t determine their savings,” Rinaldi says.

Don’t Let a Better Job Stop Your Retirement Plan

People shouldn’t let their retirement fund take a hit if they change jobs. Too often, employees opt to cash out a 401(k) from their previous employer.

If they do cash out before age 59 1/2, they will pay a 10% penalty on top of income taxes, which could be as much as 37% if they are a high earner. In response to the recession and pandemic, fees for raiding 401(k)s were waived in 2020.

The smart move is to roll over the 401(k) into an IRA, which people can invest in any way they want.

Bad timing is another deadly trap. Most employer-provided retirement plans require people to work a certain length of time before they become eligible for full benefits, called vesting.

Prepare for college expenses with a 529 plan.
Parents with young children, take note: It’s never too early to consider your kid’s college. But financial advisors strongly recommend that parents still make retirement savings their priority.

“A secure financial future is vital. It’s up to the parents to provide the majority of funding to get them through their golden years, and no one will do that.”

A 529 plan is an excellent way for parents to save for education, McClary says. A 529 plan — because the plan is authorized by Section 529 of the federal tax code and is a tax-advantaged savings plan for a college education or tuition at any secondary or elementary school.

Parents should start saving early if they are determined to send their children to college. Like any other big-ticket expense, it’s easier to save a little over a long time than to play catch-up when their kids are in high school.

Protect earnings with disability insurance
Finally, people should safeguard their financial future. If they are hurt or injured and can’t work, disability insurance will replace up to 60% or 70% of lost income, but only for some time.

Most employers offer short-term benefits, but many big companies provide long-term benefits for up to 5 years, sometimes even their lifetime.


How Much Should a 30-year-old Save for Retirement?

By age 30, you should have saved an amount equal to your annual salary for retirement, as both Fidelity and Ally Bank recommend. If your salary is $75,000, you should have $75,000 put away. How do you do that? “When starting your career, commit to automatic savings of 20% per year into your 401(k).

Can You Start Saving for Retirement at 30?

Yes, you can start saving for retirement at 30

Is It Too Late to Start a 401k at 30?

It is never late to start saving money for retirement. However, the older people get the more constraints like wanting required minimum distributions (RMDs) will limit your options for retirement. The good news is that people have much more time than they think.

Is 30 Too Old to Start Investing?

Many people get so bogged down in life that they don’t start investing until it’s late. Luckily, getting started at 30 still leaves people with plenty of time to save for retirement and the future.

Should I Open a Roth IRA at 30?

Opening a Roth IRA has no age limit.

Is 20 Years Enough to Save for Retirement?

If you got a late start or start over, you can build up retirement savings relatively quickly. The amount you can save in 15 or 20 years depends on several factors, but it’s certainly possible to retire comfortably.

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