Retirement tips for the individuals in their 30s
Turning 30 is one of the important milestones in our lives. Responsibilities pick up in the 30s with some getting married, buying their first home, or starting a family. With big purchases and important events, debts and huge loans are bound to come up for most people, which put retirement savings plans on hold.
But if you balance your spending and invest wisely, it’s possible and essential to start planning for your retirement in your 30s. Here’s how:
1. Track your expenses
If you haven’t been already, start tracking your expenses. How much you are spending on your Starbucks habit, online shopping spree, or premium channel subscription that you don’t watch? Consider cutting back on habits and expenses that won’t impact your current lifestyle.
2. Protection from unexpected
Even if you have a perfect savings plan in place, unexpected events like losing a job or disability due to an accident can derail your retirement plan. Thus, preparing for the unexpected will help you continue your investments and future financial goals. Here’s how to do that:
Unexpected job loss: Start creating an emergency fund that covers regular expenses for at least 3-6 months. Having this cushion will allow you time to find a new job without having to worry about daily expenses.
Short-term disability: Many employers provide insurance for short-term disability. However, if yours don’t you should consider buying a separate insurance policy or create a strong emergency fund you can rely on.
Death of a breadwinner: Unfortunate events like death set the whole family back emotionally as well as financially. If you are married or have kids, make sure you have life insurance to help your family cover expenses when you are not around.
3. Don’t cash out 401K
Cashing out and spending your 401K savings every time you change your job can be tempting to many but this can significantly hurt your retirement . Moreover, you not only have to pay taxes on the returns, but you may also be charged a penalty for early withdrawal. Instead of cashing out your 401K consider rolling it over into IRA and invest the amount into ETFs or mutual funds based on your risk and investment appetite.
4. Consider investing in stocks
Many people shy away from investing in stocks due to their volatile nature. However, if done wisely, investing in stock for a longer period can help you double your investment. Thus, investing in stocks will not only help you with monthly income plans after retirement but also outpace an increasing inflation rate.
When in the 30s, planning for retirement should be your priority. Though the responsibilities and expenses increase during the 30s, the paycheck amount rises too for most people. If you manage your spending and savings wisely, you can easily build a retirement corpus with the savings plan.