How to Save for Retirement in Your 30s: 7 Steps to Secure Your Future Today

Retirement seems far away in your 30s but the decisions you make now will have a lifetime impact. By starting your retirement savings in this decade, you may have plenty of time for your investments to grow and compound.

If you’re wondering how to save for retirement in your 30s, here are 7 steps to secure your future today. 👇️😊️️️️️️️️️️️️️️️️️️

1. Use Compound Interest

The best thing about saving for retirement in your 30s is you have time. The longer your money is invested the more time it grows exponentially. The earlier you start, the more compound interest works for you!

For example, if you invest $10,000 at 7% interest, compounded annually, after 30 years your investment will be around $76,122.

Let’s assume you start saving $500 a month at 30 and earn 7% average return. By the time you’re 65, you’ll have over $1 million saved for retirement. If you wait until 40 to start, you’ll need to save almost $1,200 a month to get to the same goal.

2. Max Out Employer-Sponsored Retirement Plans

One of the simplest ways to grow your retirement savings is to max out your employer-sponsored retirement plan like a 401(k). Many employers offer matching contributions where they match your contributions up to a certain % of your salary. This is free money for your retirement so make sure you contribute enough to get the full match.󠁧󠁢󠁳󠁣󠁴󠁿

For example, if your employer offers 100% match on contributions up to 4% of your salary and you make $60,000 per year, contributing 4% ($2,400) means your employer will contribute $2,400. So in total that’s $4,800 going towards your retirement with half of it being “free” money.

Let’s say you start contributing 10% of your salary ($60,000/year) to a 401(k) with a 7% return, in 30 years. In this case, when you’re 65, you’ll have around $1.2 million.

3. Open a Roth IRA for Tax-Free Growth

In addition to your company’s retirement plan, consider opening a Roth IRA. With a Roth IRA, you contribute after-tax dollars, but your withdrawals in retirement are tax-free.

*The maximum contribution to a Roth IRA for 2024 is $6,500 per year.

For example, if you contribute $6,000 to a Roth IRA every year for 30 years and earn 7% average return, your account could grow to over $600,000. And since you paid taxes up front, this is all yours tax-free in retirement.

4. Diversify Your Investments

Diversification is the key to a balanced retirement portfolio. It means spreading your investments across different types of assets like stocks, bonds, real estate etc.

Here’s how to diversify:

• Stocks: These give higher returns over the long term but more risk.
• Bonds: Bonds are safer than stocks and give steady income.
• Real Estate: Investing in real estate, either directly through property or through Real Estate Investment Trusts (REITs) can give you income and capital growth.
• Mutual Funds/ETFs: These give you instant diversification by spreading your investment across many assets.

5. Contribute 15% of Your Income

As you progress in your career and your income grows, you should increase your retirement contributions. The goal is to increase the percentage of your salary you’re contributing to retirement. A general rule is to save 15% of your income.

6. Automate Your Savings

One of the best ways to make sure you save for retirement is to auto contribute. When your retirement contributions are taken out of your paycheck or transferred from your bank account, you’ll be less likely to miss a month or spend the money elsewhere.

You should contribute to your 401(k) and any other retirement accounts you have, like your Roth IRA.

If you contribute $500 a month to your Roth IRA, you’ll contribute $6,000 a year without having to remember to make the transfer.

7. Get Financial Advice

Retirement planning can be tricky, especially with all the different retirement accounts, tax implications and investment strategies. Get a financial advisor. A professional can help with portfolio diversification, retirement withdrawal strategies, estate planning, etc.

The Bottom Line

Your 30s are the time to get serious about saving for retirement. By following these 7 steps, you’ll be doing more than just thinking about how to save for retirement. With these actionable steps, you’ll secure your future.

Get started today – your future self will thank you. 💸🕰️👊🏼🎉