5 Retirement Planning Tips When You’re in Your 30s
A lot can change from your 20s to your 30s. By now, it’s likely that you’ve been out of school a while and have been working full-time for a decade or more. You may have your own assets such as a car and a house to pay for, and you may even have a spouse and children who rely on you.
To protect your assets and a legacy you may want to leave for your family when you pass away, it’s important to start ramping up your retirement savings before you reach age 40. With more than 30 years to go before retirement, this is the best time to start building your nest egg and earning interest on your investments.
Here are a few tips to help you get ahead on your retirement plans in your 30s.
1. Increase your retirement account contributions.
It’s important to increase your retirement savings by contributing the maximum amount allowed if you can afford to do so. As noted by the IRS, the contribution limit for employees who participate in a 401(k) has increased to $19,500 this year. If you have an individual retirement account (IRA), the max amount you’re allowed to contribute each year is $6,000.
If you can’t afford to contribute the maximum, at least try to double the amount you’ve been contributing. Employers often match up to 3 or 4% of 401(k) contributions, which is what you may have been contributing in your 20s. If you can bring that contribution up to at least 8%, you will get that much closer, that much faster, to reaching your retirement savings goals.
2. Protect your assets with proper insurance.
Now that you have more assets, you have more to lose. It’s important to continually save for retirement despite whatever life events may happen. For example, in the event you get hurt at work and are not able to perform your job duties, your retirement savings will be set back. Disability insurance can replace a percentage of lost wages for a certain period of time. Life insurance is another type of insurance to look into as it could protect your assets when you pass away.
3. Get out of student loan debt.
There are various programs available that you may qualify for that can help you get out of student loan debt. If you don’t qualify for them, make a plan to start doubling your student loan payments and talk to a private lender about student loan refinancing. A few of those programs include:
- Teacher loan forgiveness. Teachers who work for low-income schools or educational agencies may qualify for this program.
- Public service loan forgiveness. This program is for select people who have worked in a public sector job for a certain period of time.
- Income-driven payment plans. If you’ve recently lost your job or had a reduction in income, find out if your lender will allow you to move to a modified payment plan based on your current salary.
4. Roll over retirement accounts from past employers.
Now that you may have worked for a few different companies, it’s likely you have more than one retirement savings account. It’s easy to forget about old accounts along with the amount of money you have in them and what fees you are being charged to keep them open.
To help keep track of your retirement accounts, speak with each financial institution to see if rolling them over into one account would make financial sense. If so, they will be easier to track all from one location.
5. Get help from a financial professional.
A financial professional can work with you to explore additional ways that you can prepare for retirement while you’re in your 30s. For further assistance, schedule a free consultation with the top-rated accountants at Miller & Company.