In Your 30s? It’s Not Too Late to Start Investing in Your Retirement
Much of the traditional wisdom that’s bandied about regarding retirement planning assumes that everyone started saving and investing during their early- to mid-twenties once college was over and a quality job had been procured. For many young workers, however, the realities of a challenging employment landscape, student loans, wage stagnation, and more has kept concerns about the inevitable future on the backburner. Thankfully, it’s never too late to start investing in your retirement, even if you’re well into your thirties. Here are a number of ways you can start investing now that will make good use of the 30 odd years you have left in the workforce.
Open a Roth IRA
If you’re really serious about meaningful long-term savings, start putting in the time to learn a bit about investing. Then, open a Roth IRA. A Roth IRA is one of the best moves you can make when it comes to investing in your retirement, because they allow your money to increase tax-free. You can also withdraw the funds in your Roth IRA without a tax penalty once you reach age 59 1/2. The lack of taxation can easily mean you earn tens of thousands more than you would with another financial investment.
Increase Your Earnings
While it isn’t necessarily an investment strategy per se, increasing your earnings is a great way to have more cash on hand to invest in your future. Whether you need to ask your boss for a raise or you need to gather a bit more education to justify seeking one, put some effort toward making more income. Then, once you’ve increased your earnings, keep your spending the same. The extra that you make can go into your investments and retirement savings in order to make up for lost time.
Stay on Top of Your Emergency Fund
An emergency fund is more than having a little savings for those times when your car breaks down or the water heater goes out. An emergency fund is the amount of cash you’d need to have on hand if you lost your job and were out of work for three to six months, and if you don’t currently have this kind of cash in a savings account, it’s essential for your long-term financial health that you start saving until you do. Unexpected expenses or unemployment can wreak a financial havoc that some people take years to recover from. Don’t be one of them.
Put at Least 15 Percent of Earnings Aside
Many people who are new to investing in their future non-working years are unsure about how much money they should set aside for retirement. While there is no one right answer for everyone, a good rule of thumb is to put aside at least 15 percent of whatever you gross each and every month. Of course, if you make a good salary and are able to set aside more, you should certainly do so, as every dollar that you invest has the potential to increase itself — something your money won’t ever do if it’s just sitting in your checking account or taking you out to dinner.
Make Use of Employer-Sponsored Plans
If your employer has an investment plan for employees such as a 401(k), take advantage of it as much as you possibly can. Most companies will match your contributions dollar for dollar up to a certain amount, which means you’ll easily double your investment for as long as you work there, and many employer-sponsored plans grow tax-free, as well, which keeps more of your money in your pocket. Should you ever change jobs, you can arrange to keep the 401(k) open as it is or roll it into other accounts, so it can remain a viable vehicle for investing.
Stick to a Budget
Most people have a sense of their monthly budget, in terms of how much their utilities generally cost, the cost of their mortgage, insurance, and the like, but too few people have a well-defined budget that includes items like retirement. Even fewer people have a specific budget and stick to it. If you’re serious about saving for your future, you need both. That way, you’ll not only feel in control of your finances, but you actually will be in control of your finances — an essential ingredient for successful investing.
Even if you’re in your thirties, you can still build a robust retirement savings that will keep you clothed, sheltered, and fed well into your old age. From sticking to a budget to opening a Roth IRA, follow these tips, and you’ll be well on your way to long-term financial stability in no time.