How to Start Saving for Retirement in Your 30s

“This article will help those in the beginning of their careers learn to save for retirement.”

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A friend who is about to turn 30 recently confessed to me that she hasn’t been saving for retirement. She asked me if her entire retirement is wrecked now. The answer is no.

Many millennials have not yet begun to build a nest egg. A recent Wells Fargo and GfK survey of 1,005 employed millennials ages 22 to 35 found that 41 percent have not started saving for retirement. This is hardly surprising, considering many millennials start off their careers saddled with big student loan bills and modest salaries that can make saving difficult.

[See: 10 Retirement Planning Moves to Make in Your 20s.]

If you haven’t yet begun building wealth, your 30s is a great time to start saving. Here’s how 30-somethings can get caught up on retirement savings and start to create a financial plan for retirement.

Start capturing compound interest. If you start saving $100 per month at age 20 and earn an 8 percent rate of return each year, you will have about $18,000 in savings at 30. That’s a nice start to building wealth for retirement. But it’s not impossible to catch up if you delay saving until after 30. The key is to get the power of compound interest working in your favor as soon as possible. Anything you save in your early 30s still has another 30 years to compound before retirement at age 65, which is plenty of time to start accruing some impressive returns.


Decide whether to pay off debt or save for retirement. Many millennials have student loans they need to pay off. You may also have debts from your car, home or credit cards. Sometimes the debt is unavoidable. But you don’t necessarily have to be debt-free before investing for retirement. Compare the interest rate on your debt to what you could earn by investing the money. If you earn get a better rate of return from your retirement investments than the annual percentage rate on your debts, then investing for retirement should be your priority.

[See: How to Save for Retirement on Less Than $40,000 Per Year.]

For most 30-somethings, paying down high-interest credit card debt first is a good idea. But it may not make sense to pay off the student loans with a 5 percent interest rate before putting any money into a retirement account that could earn you 8 percent or more annually. The chance to get a 401(k) match tips the equation even more strongly in favor of saving for retirement. Wanting to get out from under debt is understandable, but doing so at the expense of saving anything for retirement – especially if there’s an employer match available – isn’t typically a wise idea. Millennials who are paying off debt should consider splitting their efforts between saving for retirement and paying down debt with a low interest rate. This is especially true if you can refinance your student loans and other personal debts and lower the interest rate.

Automate your savings. Falling into a habit of stashing money in a 401(k) is easy when your employer is taking regular deductions from your paycheck. Saving when your employer doesn’t provide a 401(k) or you work as an entrepreneur takes more research and discipline. There are several types of individual retirement accounts that provide similar tax breaks to saving in a 401(k) plan. You may also be able to set up a direct deposit every month so that you won’t forget to fund your retirement account. As your salary grows, aim to tuck a little bit more into your retirement accounts each year.

[See: 10 Ways to Repair Your Retirement Finances.]

Workers in their 30s still have several decades to prepare for retirement. While people who started in their 20s have already benefited from some investment growth, there’s still plenty of time to build wealth for retirement. If you make a habit of saving, even while paying off debt, you should be able to accumulate a sizable retirement nest egg.

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