30 & Behind? How to Catch Up on Retirement!

Why Saving for Retirement Matters

It’s tempting to focus on immediate expenses rather than saving for retirement, but the earlier you start, the more time your money can grow through compound interest. Even modest contributions add up over time, helping you achieve financial freedom and peace of mind.

If you’re in your 30s and haven’t prioritized retirement savings yet, don’t worry – it’s not too late! The key is to begin taking action today.

The Power of the Rule of 72

A great way to understand how your money grows over time is by using the “Rule of 72.” This simple formula estimates how long it takes for your money to double based on an annual return rate. Just divide 72 by your expected annual return percentage. For example, if you earn an average of 10% in the stock market, your money will double in roughly 7.2 years.

Let’s break that down: if you invest $100,000 at age 30 and it grows at 10% annually, by the time you turn 65, that amount could grow to $3.2 million (your investment would double roughly 5 times)! It’s eye-opening to see just how significant the impact of time has on your money – even if it’s a smaller amount.

Tips to Get Started

If you feel behind on retirement savings, the first step is assessing your current situation and creating a plan. Here’s how:

• Assess Your Savings: Take stock of your 401(k)s, IRAs, or other retirement accounts from current and past jobs.
• Set Your Goals: Determine when you’d like to retire and how much you’ll need. A common rule of thumb suggests aiming for 10 times your annual salary by the age of 67. If you earn $50,000 per year, your retirement goal should be around $500,000.
• Start Saving Today: Even small contributions matter. Set up a designated retirement account and schedule automatic deposits. As your financial situation improves, increase your contributions. Time lost is money lost!

How to Catch Up If You’re Behind

If you’re starting your retirement savings journey in your 30s, you may feel like you’ll never catch up – but you absolutely can. Here’s how:

• Maximize Employer Match Programs: If your employer offers a 401(k) match, contribute enough to get the full match – it’s essentially free money!
• Increase Your Contributions: Start small and increase your savings by 1 – 2% each year. Even small bumps can make a big difference over time. Aim to eventually put aside 15% of your take-home pay annually.
• Open an IRA: An Individual Retirement Account (IRA) can supplement your workplace retirement plan. It’s also a great primary option for freelancers and self-employed individuals.
• Don’t Cash Out Old 401(k)s: When changing jobs, roll over your funds into another retirement account rather than withdrawing them.
• Take Advantage of Catch-Up Contributions: Once you turn 50, you can contribute extra to retirement accounts – this can be a powerful tool for closing the gap if you believe you’re still behind schedule.
• Cut Unnecessary Expenses: Review your monthly subscriptions and other discretionary spending. Are there any cuts you can make to free up money to boost your retirement savings? Remember, even minor contributions can grow to a substantial sum with time.
• Allocate Extra Income: Put most of your bonuses, tax refunds, and unexpected windfalls directly into your retirement or other investment accounts.

We’re Here to Help!

Most people experience a wake-up call when it comes to retirement in their 30s. Even if you feel behind, the most critical step is to start today. Every dollar saved now has the potential to grow exponentially over time. By making small but strategic financial moves, you can build a comfortable nest egg and enjoy the financial security you deserve. Your future self will thank you!

If you want to learn more about our retirement programs or would like to speak with a financial advisor, we’re ready to help. Please stop by any of our convenient branch locations or call 888-777-9982.