Have you started saving for retirement? I recently saw this chart on Business Insider that says someone who is 35 years old should have $10,765 saved in their IRA and someone who is 40 years old should have at least $14,441 saved. Based on those facts, are you an average American?
In case the answer is no, here are four ways to help you start saving for retirement in your 30s:
Stop spending and start saving
This is the easiest way to start saving for retirement in your 30s; just cut out some daily spending, watch it add up at the end of the month and then save it for retirement. Some people feel that retirement can’t fit into their monthly budget and that’s probably true. However you can make it fit by cutting some down (or out) some of your other expenses.
Don’t make plans for your end of the year bonus
Year-end bonuses are exciting. It’s a monetary value of all the hard work we’ve done throughout the year. I used to love getting my bonus. I would spend most of it and use a little bit to pay off debt – when in reality it should have been the other way around. But that’s water under the bridge.
This year was the first time I could actually afford to do whatever I wanted to with my year-end bonus. I put the entire amount into my retirement savings account, avoided paying taxes and increased my net worth all at the same time. I couldn’t stomach the fact of losing half of my hard earned money in taxes if I took it in cash. So I rolled it over to my retirement savings and investment it for the long term.
Save your tax refund
If you can’t afford to set some of your regular monthly income aside for retirement then what better way to ensure you continuously save than to invest a lump sum every time you get your tax refund. If you’re lucky enough to get a tax refund don’t spend it. It’s nice to get a lump sum of cash every April, but instead of taking that money and going on a trip why not put it into your retirement savings.
Don’t think it will happen later
In your 30s there are a lot of other things you probably want to do before retirement, but that doesn’t mean you should neglect your future. Maybe you want to travel, buy a home and lease a new car. Those are all great goals, but it doesn’t mean that you should forgot about retirement now and start saving later.
Consistently saving on a regular basis is the key to retirement success. If you don’t start now, when will you do it? Procrastination is easy, discipline is hard. This is the exact same reason why I advise people not to stop their retirement savings all together when they have other priorities. Because when will you start again?
If you need to focus your monthly savings/spending somewhere else temporarily don’t stop your regular retirement contributions, just lower them. That way you can increase the contributions again later on and it won’t be as big of a shock to your budget as if you had stopped them all together.
Kristina Tahnyak
Tahnya is a Certified Financial Planner and former Investment Advisor turned marketing and communications professional She holds a degree from Concordia University, is debt free and currently works in the field of digital marketing.
Right now, I’m happy to say that I’m consistent on my budgeting. I listed all my expenses and income and trying to lower down my expenses every month.
Yes! Now is the time to get started, if you haven’t already!
Does that article consider 401k levels of all those ages similar to the IRAs? I don’t have an IRA, but I do have a 401k. It makes me feel good to know that after turning 29 last week, I have as much in my 401k as the average 50-55 year old has in their IRA. I had thought I was behind!! Hopefully I can continue this trend and be able to retire earlier. Currently, I don’t put any extra towards my retirement, but I put 5% from my bi-weekly paycheck into my 401k and my employer adds in 3% of my biweekly paycheck as well.