Introduction
Your 30s are a sweet spot for retirement planning: old enough to earn a decent salary, young enough to let compound interest work its magic. Here’s how to avoid playing catch-up later.
1. Max Out Your Employer 401(k) Match
If your company matches contributions, aim to hit the limit. Example: If you earn 60kandcontribute660kandcontribute63,600/year), your employer might add another $3,600. That’s free money.
2. Open a Roth IRA
Contributions grow tax-free, and withdrawals in retirement are tax-free. Max out at $6,500/year (2023 limit).
3. Diversify Beyond Stocks
Add bonds (stability) and real estate (via REITs) to your portfolio. A common rule: Subtract your age from 110 to find your ideal stock allocation (e.g., 80% stocks at age 30).
4. Calculate Your “Retirement Number”
Aim for 25x your annual expenses. If you spend 50k/year,you’llneed50k/year,you’llneed1.25 million. Use a retirement calculator to adjust for inflation.
5. Plan for Healthcare Costs
Fidelity estimates the average couple will spend $315,000 on healthcare in retirement. Consider a Health Savings Account (HSA) for tax-free medical savings.
6. Pay Off High-Interest Debt
Credit card debt (15–20% APR) cripples retirement savings. Use the debt avalanche method: Pay off highest-interest balances first.
7. Revisit Your Estate Plan
Update your will, power of attorney, and beneficiaries. Life changes fast—so should your legal documents.
Case Study: Alex, 35, retired at 55 by saving 50% of his income, investing in index funds, and avoiding lifestyle inflation. His advice: “Live like a resident until you’re a millionaire.”