5 Must-Know Practical Ways to Save for Your Retirement in Your 30s

Everybody dreams of an early retirement but very few work to make it happen. Whether you choose to retire early or later in life, planning for retirement is essential. You do not want to find yourself financially unstable after working hard all those years. The 30s are a perfect time to start saving for retirement.

This is how to plan for your retirement in your 30s. 

Paying Off Debt vs Saving for Retirement

It is understandable to want to clear off debts, especially student loans, first. In fact, some want to clear off all the debts before they even start saving. This is a very bad idea, especially if you earn a better rate of return from retirement investments than the annual percentage rate on your debts.

Do not clear off debts at the expense of saving. If there is an employer match, it is a saving opportunity you do not want to miss. Compare the interest rate on the debt to the interest rate you could earn by investing money. Split the efforts between clearing off the debts and saving for retirement at 30.

Put Salary Raises in 401(k) Savings

You will be making a maximum allowable contribution every year to 401(k), which is an employer-sponsored fund. As you get raises in your career, put them in the retirement savings rather than spending.

If you think you cannot put all the pay raises into the retirement funds, try to increase the contribution gradually over time. Even a 1 percent incremental will make a huge difference in the future.

Open an IRA Account

Open a separate IRA account even if you are putting in money in 401(k) or other employer-sponsored funds.

IRA accounts such as traditional IRA or Roth IRA are ideal for those whose employers do not offer 401(k) or those who don’t have an employer. However, anyone can open these accounts. Earnings in your IRA accounts will keep growing as long as you have money in it.

Roth IRA has income limitations whereas traditional IRA doesn’t. Understand the features and requirements of these accounts and open the right one.

Allocate Assets Aggressively

Apart from funding the savings accounts, you must invest aggressively in your 30s. Allocate about 80 to 90 percent of your assets to a diverse array of stocks. Make sure you proactively keep an eye out for existing retirement assets so that you don’t miss any opportunities.

Don’t let market volatility be a deterrent for stock investment. The equity markets will rise and fall, but at some point, the market will stabilize. The 30s is the age where you can weather a market setback and have the time to wait for a rebound.

Investing long-term will add to your retirement wealth.

Do Not Cash Out Savings Before Retirement

Once you start putting money into your 401(k) or IRA, try not to dip into those savings until you retire. If need be, you need to consider ways in which you can withdraw money from these accounts without paying penalties.

If you do not have the best retirement plans in your kitty, you will be missing out on making some big bucks for your retirement. Make sure you consider all the available options so that you can financially secure your future.

Author Bio: Rick Pendykoski is the owner of Self Directed Retirement Plans LLC, a retirement planning firm based in Goodyear, AZ. He has over three decades of experience working with investments and retirement planning, and over the last 10 years has turned his focus to self-directed accounts and alternative investments. Rick regularly posts helpful tips and articles on his blog at SD Retirement as well as Business.com, SAP, MoneyForLunch, BiggerPockets, SocialMediaToday, and NuWireInvestor.

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