How to jump-start your retirement savings when you are in your 30s

Life gets a little more complicated when you’re in your 30s.

You can get married, have kids or buy a house. You may also still be carrying student debt. On top of that, you have to set aside money for retirement.

“We’re all going to have to retire eventually,” says certified financial planner Lauryn Williams, four-time Olympian and Dallas-based founder of Worth Win, which provides services virtual financial service said.

“Once you’ve turned 20 and you’ve entered your 30s, time becomes essential.”

For a comfortable retirement, Fidelity Investments recommends that, at age 30, you should try to save once your current salary and twice your salary at 35. When you retire around age 67, you should there are 10 times. the company records your final salary.

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When it comes to actual savings, the average 401(k) balance for ages 30-39 is $42,700, Fidelity said.

Tyler Huck, an Alpharetta, Georgia-based financial advisor for Oxygen Financial, a financial advisory and wealth management firm that specializes in the younger generation, said that even though people know they have to save, but they may not be planning it right – if at all.

“I don’t think enough people are following ‘What do I really need to save? What rate of return do I need to make on my investments?’ he say.

Jay Revell, 33, knew from a young age that he needed to save for retirement. He grew up in a house where finances were discussed around the dinner table.

Upon graduating in the spring of 2009 at the age of 22, he landed a local government job in Tallahassee, Florida, and began investing in a 401(k).

He also started putting $50 a month into a Roth Personal Retirement Account, which is set up after taxes. As a result, all future withdrawals are tax-free.

Revell, who now works for the Greater Tallahassee Chamber of Commerce, said: “You get addicted to it when you see it grow. “Every year I just keep adding to it and adding to it.

“It was one of the best things I’ve ever done.”

He is now married and has a 2 and a half year old daughter, with another on the way. He also has some hustle to fund his retirement account: He’s the author of the book “The Nine Virtues of Golf” and has a media company focused on the world of golf.

Revell is also currently maxing out his Roth IRA, which has a 401(k) at his current job and an IRA for a 401(k) balance he’s carried over from his previous jobs. He calls his portfolio “healthy and strong.”

If you haven’t started in your 20s, don’t worry – but try to get started. If you’ve already started saving, but haven’t made a plan yet, come up with a plan.

The first thing to do is understand your cash flow, says Williams, a member of the CNBC Council of Financial Advisers.

“If you go and just spend time going over your budget once and have a good understanding of recurring expenses, you’ll find a black hole of savings,” she says.

Once you find yourself able to put that aside, automatically put that amount into savings.

If you don’t have an emergency fund, make sure some of it goes into one. Williams recommends either building a “buffer” of $5,000 to $10,000, depending on your income, or three to six months of take-home pay.

If you have a specific retirement savings goal, run the numbers. Determine what you’ll need to live in retirement, and then figure out how much you’ll need to put in to reach your goals.

For example, if you’re 35 years old with no savings and your annual pre-tax income is $60,000, you’d have to save $750 a month, or 15% of your monthly income, to have about $1,00. 03 million dollars in savings at your time. is 67, according to NerdWallet’s retirement calculator. The calculator assumes a 3% inflation rate, a 2% salary increase a year, and a 6% rate of return before retirement.

If you have debt, you can balance paying off debt and saving for retirement.

Student loan. If it’s federal, you don’t have to pay until January 2021, thanks to an executive order signed by President Donald Trump in August. You can also pursue debt forgiveness or consider an income repayment plan. , based on how much you earn and get debt forgiveness in 20 or 25 years.

In the case of an income-based repayment plan, stick with a 401(k) or IRA, which has pre-tax contributions, so your adjusted gross income will be lower, Williams suggested. That will lower your student loan payments.

You’ll set aside money for retirement, and you’ll be rewarded for doing so, she said.

If you have a private student loan, you might consider refinancing to get a lower interest rate, says Williams. Just make sure to pay on the minimum amount due.

“You want to be really aggressive about paying off your student loan debt, but you don’t want to sacrifice savings,” says Williams.

If your company offers an employee-sponsored plan, it should at least be relevant to the employer.

However, “saving 3% of your income won’t be enough to help you retire,” Williams said.

So try to get as high as you can and plan to hit the maximum contribution in two to three years, she says. For 2020, that’s $19,500.

Huck recommends setting up an automatic contribution increment of 1% per year.

Your goal should be a 15% pay cut, which may include your employer match, he says.

If you meet the income requirements, a Roth IRA can be a good way to save for retirement, many experts advise.

If you are married and filing jointly and have adjusted adjusted gross income of $196,000 a year, you can contribute up to an annual limit of $6,000. You can contribute a reduced amount if your income is between $196,000 and $206,000.

“People would really enjoy getting that tax-free in retirement, but it’s not a one-size-fits-all,” Williams said.

If $6,000 is a small percentage of your income, make sure Roth isn’t your only retirement savings, she says. If that’s a large percentage, then Roth might be all you need.

Again, if you have an income-based repayment plan on your federal student loans, Roth may not be right for you because it doesn’t reduce your adjusted gross income, she says. .

If you have young children, you will also want to provide for them. That might make you think of a college savings account.

However, if you can only save so much, make sure to focus on retirement before your kids get into school, says Huck.

“When you decide to retire, you just can’t go to the local bank and take out a loan,” he said. “A child who doesn’t have enough savings for school can go to the bank and take out a loan,” he said.

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