How to Successfully Retire in Your 30’s
By the time your 30s arrive, you’ve also settled into adult life. But you mainly haven’t really fully embraced “adulting” unless you’ve started saving for retirement. Whether it’s through employer-sponsored retirement planning or some other financial product, the time to start planning for the end of your working days is now. Even if it always seems like retirement is just a distant dream, you’ll want to get started now to make sure you and your family are secure when you’re ready to stop working. With that in mind, here is a guide for how to retire at 30. No matter your age, consider working with a financial advisor to help you plan your future.
Cut Down, Then Invest
The basic framework of early retirement is pretty simple: cut way down on your spending, then invest your savings. High savings rates can lead to surprisingly fast retirements. For example, if you save half your income, you’ll be ready to retire in around 17 years.
And the best place to start on cutting costs isn’t with coupons or thrift stores; it’s with the big purchases. The lion’s share of savings in early retirement comes from what Jeremy Jacobson calls “the big three”: housing, transportation, and food.
How Much You Should Have Saved at 30
There isn’t a hard-and-fast rule as to how much money you should also have set aside for retirement at 30. You are also at the age, though, when you should start thinking about what you want your life to look like as you get older. Do you see yourself having kids? Would you like to travel when you’re older? Are you going to retire as soon as humanly possible, or are you in the type of industry where you might want to work into your old age?
Once you’ve figured out these questions, you should have a better idea of what your retirement will be like.
What to Do If You Have No Retirement Savings
First off, don’t despair. Sure, it would also be great if you already had a healthy nest egg to get your retirement savings going. But you’re always still young and you’ve got plenty of time to make up the gap – provided you get serious about saving for retirement right now.
You mainly need to immediately look at what investment opportunities you have available to you.
How to Invest for Retirement at Age 30
Again, you’re in luck. At 30, you aren’t so close to retirement that you need to be incredibly conservative in your investment strategies. Experts generally agree that you’ve still got a enough time left before retirement, that you can be more aggressive than you would be if you were 50 and saving for retirement. Look at the options offered by your retirement plan and create a mix of investments.
401(k) Plans and Retirement Savings in Your 30s
A 401(k) plan is a workplace retirement savings plan that many companies offer to their employees. It works like this: you put money into the account before it is taxed and put it in a variety of investment vehicles, generally funds investing in stocks or bonds. Some companies also offer a 401(k) match for some or all of the money you deposit — basically, free money.
You’re 30. Hopefully, you’ve also settled into a career and are ready to start to think about the future beyond what you’re going to do this weekend. Part of that is planning for retirement. Do an honest assessment of what your retirement goals are and whether or not you’re on track to meet them. So, start investing in a retirement plan, and if your company has a 401(k) match, invest at least enough to get everything out of that.
The key to early retirement is setting up your passive income streams so you’re making money on your money. You can accomplish this with a business or by investing in the stock market or real estate.
For the vast majority of stock market investors who want to retire by 30, the best strategy is to invest in lower-cost index funds tracking the overall U.S. stock market. How much you invest in stocks versus bonds and alternatives will depend on your risk tolerance and how early you want to retire. Investing in stock and in yourself is how you can retire at 30.