10 Ways to Prepare for Retirement in Your Thirties

Your 30s are a time when you may finally hit your stride financially. Student loans may still linger and you may feel the burden of caring for aging parents or young dependents, but chances are your income level has reached new heights.

If you haven’t made time to focus on retirement savings yet, don’t fret. Catching up in your 30s is assuredly attainable when you set solid habits. Here are some practical steps you can take to help balance your long-term financial goals.

1. Prioritize saving for retirement

The earlier you start saving for retirement, the more time you have on your side to allow the power of compounding to grow your money. Familiarize yourself with your qualified employer-sponsored plans (QRPs) and make sure they are working for you.

If possible, contribute the maximum allowable amount to your 401(k), 403(b), or governmental 457(b). Doing so will help fund your retirement and lower your taxable income. If you cannot contribute the maximum to your QRP, but your employer offers a matching contribution option, aim to give at least as much as the matching contribution so that you’re taking full advantage of that essentially “free” money.

2. Look into an IRA

Making your QRPs a priority is wonderful, but investing elsewhere is also a wise step – especially if your employer doesn’t offer that option or you’re self-employed. Consider opening an Individual Retirement Account (IRA) to supplement your other retirement savings. Work with a financial planner to determine which type of IRA is best for you.

Once you’ve selected the type of IRA that complements your needs and preferences, consider setting up a recurring transfer so that you have one less thing to think about. If you’re married and have an income gap between partners, a spousal IRA may be advantageous as it allows one spouse to fund the retirement account of the other.

3. Take as much risk as your personality can tolerate

Your achy back and neck may scream otherwise, but you’re still young in your 30s – meaning time is on your side when it comes to retirement! With more time on the horizon, you can accept investment risks that should lead to higher average returns in the long term.

4. Stay on target

Unexpected expenses will likely pop up and there is always the temptation to cut back on retirement savings to get by. Resist that urge and keep retirement savings as your top priority.

Set aside three to six months’ expenses in a money market account or another similar interest-earning bank account so you can withdraw money without taxes or penalties. That way, emergencies will not wreck your retirement savings. Review your savings annually and adjust your habits accordingly.

5. Budget and rein in spending

If you don’t have a budget yet, start one now to keep track of your spending and allot a consistent amount into retirement savings. Once you know how much you’re spending, see if there are areas where you can cut back. Perhaps you can negotiate a lower rate on automobile insurance or your cell phone payments. If food costs are taking over your expenses, consider packing lunch for work instead of dining out.

6. Increase your savings whenever you receive a raise

When you get a raise at your job, increase your retirement contribution percentage. The average pay raise in the United States is 3% annually. Designating a portion (or all) of that percentage would lead to greater retirement savings.

It may not seem like much, but that also means it will not adversely affect your lifestyle. Small increases over time will add up to significant results. Some employer retirement plans are set up with an option to increase your retirement contribution annually, which is an effective move to make.

7. Put any bonus funds into retirement savings

When you receive bonuses, tax refunds, or other lump sum payments, place them into your retirement fund. At the very least, consider committing half of the new money to your retirement account.

8. Get ready for college expenses

If you started a family in your 20s or 30s, you may find yourself preparing for college expenses in addition to your own retirement. Consider starting a 529 plan for each child’s college and trade school expenses.

9. When deciding to take time off for childcare, remember retirement

Daycare is notoriously expensive. If your salary is going to be wiped out by childcare costs, you may consider taking time off work to care for your children.

If you find yourself in this situation, take social security benefits into account. When you reach retirement age, the Social Security Administration will calculate your monthly Social Security benefit from your 35 top earning years in the workforce, adjusted according to inflation. If you wind up not contributing to Social Security for 35 years, your benefits will be lower than their maximum potential.

10. Find ways to increase income

One of the best ways you can grow your retirement savings is by increasing your income. It likely sounds unappealing, but finding a side gig that can put more money in the bank for your future retirement is something you’ll appreciate later on.

Deliver pizza on the weekends, walk dogs or pet sit, rent extra rooms in your house, sell handmade products, or find another creative way to leverage your skills and assets to your financial advantage.

Enact Habits to Get Where You Need to Go

If you feel behind on your retirement goals, know it’s never too late to start. Be intense and banish excuses. Develop habits that will help you to reach your retirement goals.

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