Retirement Planning in Your 30s

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Retirement planning in your 30s is when your efforts should become more specific and more intense. This is true even if you began saving for retirement in your 20s, but even more so if you haven’t. You still have plenty of time, but not as much as if you had started a decade earlier. In…

Retirement planning in your 30s is when your efforts should become more specific and more intense.

This is true even if you began saving for retirement in your 20s, but even more so if you haven’t. You still have plenty of time, but not as much as if you had started a decade earlier.

In addition, the 30s are the decade where many people have serious competition for their investment dollars due to expanding life circumstances.

Time to fast-forward your savings

retirement planning in your 30s
Time to get serious!

Even if you began retirement planning in your 20s, when you reach your 30s you want to get more serious about it.

This isn’t saying that you weren’t serious when you were in your 20s, but only to indicate that your time horizon is a little bit shorter. That should be taken as a signal to step up your efforts.

If you were saving 6% of your income when you were in your 20s – which might have been just enough to max out your employer’s matching contribution – you want to increase that to the highest level you can afford. Any increase is good, but since you’re in a prime-time to grow your retirement savings, you may want to target 10%, 15% or even 20% if your budget can handle it.

This will be especially important if you’ve gotten lackluster returns on your investment in the past few years. The investment markets don’t always cooperate with our retirement plans, so this is a good time to make up for the difference through contributions.

Tweaking your progress

Your 30s are also excellent time to begin keeping a closer eye on how close your retirement planning is to your ultimate retirement goals. Are you on track? Are you a little behind? Do you need to change your investment mix? What is the investment forecast for the coming years?

You can and should track your progress by using a retirement calculator.

Let’s say that you are 35 years old, and you’ve already determined that you’ll need to $3 million at the time you’re 65 years old. You currently have $100,000 your 401(k) plan, and your employer matches 50% of the first 6% of your contributions each year. You’re earning $70,000 per year, and saving 10% of that in your 401(k).

But based on those numbers (and an expected rate of return of 8% on your investments annually) you determine that you’ll only have a little bit more than $2.4 million by the time you’re 65 – which is about 20% less than your goal. You determine that by increasing your contributions to 15% of your income, you can still reach the $3 million mark in time for retirement.

Now, with 30 years to go before retiring, will be the time to make that change. You may also want to consider adding additional retirement accounts, outside your 401(k) plan so you can improve your progress. This can include adding an individual retirement arrangement (IRA), or a Roth IRA.

Asset Allocation

vanguard 2045 target retirement funds
Sample Asset Allocation (Vanguard)

While determining how much money you will need to retire will be easier in your 30s, it also means that your asset allocation is going to begin to change ever so slightly. As you get older your asset mix should become somewhat more conservative – which is another excellent reason to increase your retirement contributions.

At this stage of your life, your retirement portfolio might include at least 90% stocks, and 10% bonds, with about 2/3 of the stock portion invested in domestic stocks, and the rest in international stocks. There are “target date funds” offered by various investment firms that will actually set up your portfolio based on the target date of your retirement.

How to manage your asset allocation across multiple accounts: It’s important to look at your entire investment portfolio as one large bucket when you balance your investments. An easy way to help perform a asset allocation across your entire investment portfolio is with a free tool called Personal Capital. This powerful tool can help you see how your investments work together. You can learn more in our Personal Capital Review, or sign up for a free account at their site.

Taking care of other business

There are other financial steps you may want to begin taking in your 30s. A well-funded, well-invested retirement plan is the foundation of all retirement planning, but there are other moves you should begin to make now that will improve your situation in the decades ahead.

If you have a mortgage on your home, you may want to begin to work out a plan to pay it off early. This can mean a comprehensive plan, such refinancing a loan with 25 years remaining, down to a 15 year term. Or you can use something less formal, such as paying extra $100 or $200 each month. The whole idea will be to set yourself up to payoff your home in sufficient time before retirement that you will have extra room to maneuver should it be necessary.

If you have children, you’ll want to begin saving for their college education while they are still very young. With college costs rising as quickly as they are, it may not be possible to completely fund their education exclusively through advanced savings, but any money that you can accumulate ahead of time will make the financial burden that much less when the time comes.

Your 30s are a critical time in regard to retirement planning. This is when you want to begin building your momentum and setting the financial stage for what will come later. The more you can accomplish now, the less you’ll need to deal with later.

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About Kevin Mercadante

Kevin Mercadante is professional personal finance blogger, and the owner of his own personal finance blog, He has backgrounds in both accounting and the mortgage industry. He lives in Atlanta with his wife and two teenage kids and can be followed on Twitter at @OutOfYourRut.

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  1. Kirk Kinder says


    Great article. The 30s are really the most critical decade. If people don’t commit to saving in their 30s, they face an uphill battle in their 40s and 50s. Unfortunately, most people still see retirement as an event that is so far on the horizon that they don’t need to worry about it.

    • Kevin Mercadante says

      Hi Kirk–There are two other things they do, both assumptions. One is being fatalistic–“Social Security won’t be there for me, and I’ll never retire–I’ll have to work until I drop”. Or they get overly optimistic–“I’m going to be rich so I don’t need to worry about retirement.”

      This is an example of two people approaching the same issue with completely opposite assumptions, but both ending up in the same place–with nothing.

      At a minimum, retirement planning should be established as a fail safe–in case your assumptions, whether positive or negative, don’t come about as you expect.

      • Ryan Guina says

        Interesting observation, Kevin. I’ve known several people who thought “I’m going to be rich so I don’t need to worry about retirement.”

        The problem with this line of thought was they failed to realize they still needed to save and invest to reach that goal. Becoming wealthy is achievable for many people, but they still need to put in the work to get there – it doesn’t happen overnight. It’s like writing a book. You many be a great writer, but unless you do the work and put the words onto paper, you haven’t written a book.

        Almost anything is achievable with enough time and work.

  2. Dona Collins says

    I admit I made some mistakes – including ignoring retirement in my 20’s. Now I’m in my early 30’s and I’m watching my family members get closer to retirement. It definitely makes me think that retirement is not as far away as I thought. AND even if I can’t “retire” per the government’s definition, what happens if I’m sick at an age earlier than I can collect other benefits? Food for thought, for sure!

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