According to the United States Department of Labor, less than half of all Americans have even calculated how much they are going to need to retire with their current lifestyle.
The truth is that Americans spend an average of 20 years in retirement, which means if you are 30, you have only lived 10 years longer than the average time people spend not working. And for probably 15 of those years, you didn’t work either.
So, you have only worked for about 15 years, meaning you have about 25 years more to go before you reach the magical retirement age of 65. This is why it is a so great that you want to start saving for retirement at 30. You have plenty of time to save enough money to keep yourself living in the lifestyle you choose. However, you might be young enough not to know for sure what that lifestyle is. In this case, it’s a good idea to start thinking about that as well.
Fortunately for you, millions of people have paved your way to a fulfilling retirement and personal finance. They can give you the tips you need to start saving for retirement at 30. Some of the best tips are listed here, which can give you an excellent start toward financing your golden years. Even if you’ve been working since you were old enough to get a worker’s permit and you haven’t yet saved a dime, you are still young enough that you can take control and make your retirement as financially sound as possible.
My Top Tips for Saving for Retirement at 30 and Beyond:
1. Do not increase your spending every time you get a raise. It can be so tempting to run out and buy a better car or move to a bigger house when your salary increases due to a raise or changing jobs. However, you were probably living just fine on the lower amount. For this reason, you should continue to live on your pre-raise wages for as long as possible. Apply and extra money you receive to your retirement savings account and leave it alone.
2. Take advantage of employer-sponsored retirement plans. Most plans offered through employers have a retirement company match program that pays you free money just for putting funds toward retirement. If your company matches your contributions to three percent, then you should be contributing at least three percent of your income to your retirement account. If they match up to six percent, then you should be contributing at least six percent. There is simply no better way to save for retirement at 30 than taking advantage of this free money. Your account will grow over time and provide you with a nice nest egg when you are able to take penalty-free withdrawals.
3. Purchase a house with the goal of paying off the mortgage before you retire. While not everyone finds their dream home when they are 30, it would be best if you can. Paying off a 30-year mortgage should be part of your retirement planning goals. Of course, if you don’t need a 30-year loan, a 15-year loan would be even better. The sooner you can pay off your house, the better off you are going to be in retirement because you won’t have a mortgage payment to eat into your savings.
4. Set and meet other financial goals so you can see how saving pays off. There are bound to be many smaller financial goals on your way to your ultimate goal of retirement. For example, you might need to save for a car, a wedding, a down payment for a home loan or college for your kids. Yes, you might have kids you will need to provide for in addition to yourself. It could be difficult to imagine if you are still single at 30, but it can and does happen! Saving to meet these smaller goals can prevent you from going into debt and preventing you from having the type of retirement you want.
5. Don’t buy the most expensive item out there when you have to make a purchase. This seems like a no-brainer, but many people get distracted by the shiny new cars that cost a fortune or the once-in-a-lifetime wedding on the beach that they have dreamed of all their life. There is no need to buy something that is over-priced just because you can. Saving money by purchasing a lower-priced car that will serve the same purpose as the more expensive one means you will have more money for your retirement. Having your wedding in a local chapel instead of on the beach doesn’t mean you are any less married. Be smart and think about your financial choices before you make them. If you truly want to be saving for retirement at 30, you will sacrifice some of these luxuries now for a stable future later.
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