Planning for Retirement: 6 Important Steps to Take In Your 30s

Did you know that most financial experts recommend having approximately 1x your yearly salary saved in a retirement account by age 30, and 3x that amount by age 40? While this is the recommended benchmark, not having achieved it by these ages doesn't mean you're out of luck. It simply suggests that your thirties may be an opportune time to start prioritizing your retirement savings and envisioning your financial future at age 60.

Your 30s is a pivotal moment in your life, marked by career strides and personal milestones. While retirement may seem distant, taking proactive measures now can establish the foundation for a secure and fulfilling future. Let’s explore six crucial steps everyone in their 30s should take as they get serious about retirement.

1. Assess Your Current Financial Situation

Everyone by the age of 30 should build a consistent habit of taking stock of their income, expenses, debts, and savings on a regular basis. Knowing where you stand currently is the only way you’ll know what goals are feasible for the future–and, more importantly, what you need to do now to achieve them. 

Jot your findings down on your phone, a piece of paper, or in a budgeting/financial journal. Then evaluate any existing retirement accounts, such as 401(k)s, IRAs, or other investments. If you don’t have any of the aforementioned investment accounts, consider getting one as soon as possible. Start educating yourself on retirement funds, IRAs, etc., or simply look into setting up an account with the retirement plan your employer offers.

2. Set Clear Retirement Goals

Once you’ve secured a retirement account, it’s time to start making retirement goals—where do you want to be in 30 years? This includes determining what age you want to retire at and the post-retirement lifestyle you mean to keep.

Start by estimating your retirement expenses, including healthcare, housing, leisure activities, etc. Once you’ve got a solid yearly or monthly cost of living estimate, make that your end goal. Next, calculate how much money you need to save (or contribute) now—each month or year—to ensure you have that amount saved and will reach your retirement goals.

3. Maximize Retirement Contributions

With a secure and consistent monthly contribution in play, you’ll be that much more prepared for retirement. But don’t forget to take advantage of employer-sponsored retirement plans and contribute at least enough to get a full employer match, if offered. A full employer match is when an employer will “match” how much money you put into your retirement each year up to a certain percent (e.g., a 5% match means that if you choose to contribute 5% of your paycheck towards retirement, your employer will contribute that same amount into your retirement account. If you contribute 4%, they’ll contribute 4%. But if you contribute 6%, they’ll only match you up to the 5% they promise.) Yes, that’s pretty much free money, so don’t pass it up.

You could also consider opening additional retirement accounts such as IRAs or Roth IRAs to supplement an employer sponsored program.

4. Invest Wisely for the Long Term

Choose diversified investments that align well with your risk tolerance—how much risk you’re willing to take—and retirement goals. Then take time to regularly review and adjust your investment portfolio as needed.

As time goes on, remember to take an active approach to retirement savings. This includes tracking your retirement savings growth and adjusting your contributions and investments as needed consistently. When huge life changes occur, such as a change in job, income, or financial situation, etc., remember to revisit your retirement goals and make any necessary adjustments. 

5. Create a Contingency Plan

Contingency plans take possible future events into account and guarantee you’re set should any of them take place. One of the most common contingency plans financially literate people use is building an emergency fund to cover unexpected expenses.

Insurance is another great way to prepare for the unexpected. So now’s the time to consider purchasing appropriate life, health, disability, and asset insurance coverage.

A good contingency plan helps your finances stay secure and makes sure you avoid tapping into retirement savings before retirement.

6. Stay Informed and Seek Professional Advice

Changes in retirement laws and regulations can happen. Your job is to stay updated on the changes in retirement laws and regulations that may impact your savings strategy. A good way to make sure you optimize your saving’s plan is to consult with a financial advisor to develop a personalized retirement plan tailored to your needs and goals. Do a little bit of research to see if your work or financial institution provides advisory services!

As you embark on your journey towards retirement, remember that every step you take today lays the foundation for a secure and fulfilling future. By assessing your financial situation, setting clear retirement goals, maximizing contributions, investing wisely, creating a contingency plan, and staying informed with professional advice, you're not only prioritizing your financial well-being but also empowering yourself to navigate the twists and turns of life with confidence and preparedness.