If you're in your 30s, you may not be all that focused on retirement right now. After all, that milestone is still (likely) a few decades away, and you may have other money matters to contend with, like saving up to buy a home or getting rid of nagging credit card debt.
But the sooner you start socking funds away for retirement, the more opportunity you'll have to grow wealth. When you put money into an IRA or 401(k) plan, that money shouldn't just sit there. Rather, you should invest it so it grows into a larger sum. And the more years you give your investments to grow, the higher your ending balance should be.
So how much money should you aim to have saved for retirement during your 30s? Well, there's no hard and fast rule. However, it may help you to know how much other people in their 30s are saving. Personal Capital Advisors (a subsidiary of Great-West Life & Annuity Insurance Company) may have an answer. It recently conducted a survey and found that as of the end of 2020, the median retirement plan balance among 30-somethings was $85,307.
Now to be clear, this is just a single survey with a limited sample set, so if your retirement savings balance is nowhere close to $85,307, don't freak out. Still, knowing where your peers stand may give you a goal to work toward.
Ramping up your savings efforts
A retirement savings balance of $85,307 is pretty solid for a 30-something. Say you're 35 with that amount socked away. Even if you were to do nothing but sit back and invest that sum in stocks over the next 30 years, after three decades, you'd be sitting on about $650,000 (if you assume an average annual 7% return, which is a reasonable assumption for a retirement plan that's invested heavily in stocks). Meanwhile, if you were to add $300 a month to your retirement plan over the next 30 years on top of that $85,307 balance, you'd end up with $989,000, assuming that same return.
Of course, if you're starting with a lot less money in retirement savings (or none at all), then you'll need to contribute a lot more than $300 a month to retire in about 30 years with close to $1 million. But here are some tips to eke out more money for savings:
- Choose one big expense to cut back on. Rent a cheaper apartment, buy a home that's well under budget, or drive a used car without a host of fancy features. The savings you reap can go directly into your retirement plan.
- Get a side hustle. There are so many flexible gigs you can do on your own time, whether it's web design, pet care, crafting, or driving for a rideshare company.
- Put all windfalls into your retirement savings. Whether it's a tax refund, a stimulus check, or a generous birthday gift from a family member, sticking your extra cash into your 401(k) or IRA could help you grow your balance.
The upside of being in your 30s is that you have plenty of time between now and retirement to boost your savings. If your retirement plan balance isn't as robust as you'd like it to be, do your best to increase it, but try not to stress yourself out too much. You have many years to build wealth for the future, and a few smart moves could put you in a solid financial place for when your time in the workforce comes to an end.