9 Things I Wish I Knew in My 30s About Retirement

If you want to enjoy the life you’ve imagined in retirement, you need to develop and follow a plan that turns your goals into reality. But retirement planning isn’t a once-and-done effort. At every stage of life, there are steps you can take to stay on track with your long-range plan.

When financial advisors ask their clients what they wish they knew about retirement when they were in their 30’s, they hear answers like the following. If you’re in your 30s and dreaming of a secure future, there’s a lot to gain from these lessons learned.  

1. Retirement will probably last longer than you expect.

That’s because you’re likely to live longer than your parents or grandparents. The Social Security Administration estimates that a current 65-year-old can expect to live another 20 years on average, with 1 in 7 living past 95. Add to that the fact that some people aspire to retire early, and others are involuntarily forced out of the workforce, and it’s easy to see why many of us could spend 30+ years in retirement.   

In your 30s it can be tough to envision living another 50-60 years—but the actuarial estimates show it’s likely you will. And the longer you live in retirement, the more money you’ll need. Unless your financial plan accounts for a long retirement period, you could outlive your money.    

2. You won’t necessarily spend less in retirement.

Once you retire, work-related expenses like commuting and weekly dry cleaning go away. But that doesn’t mean your living expenses will drop. The Bureau of Labor Statistics says people 65 and older spend about $48,000 a year per household on average, with younger retirees (aged 65-74) spending close to $53,000 a year.

When you’re newly retired and presumably in good health, you could spend more in your free time on travel, dining, recreation, and hobbies. While those costs might decrease as you age, they’re often replaced by increasing health care costs. Your retirement plan needs to include an accurate projection of your living expenses post-retirement, including a realistic estimate for discretionary spending.                

3. Living within your means is critical to growing your nest egg.

Lifestyle creep—the tendency for discretionary spending to go up as your income rises—is a real risk during your 30s. You’re likely advancing in your current company or making job changes that position you to earn a higher salary. The more money coming in, the easier it is to spend more—whether it’s the small daily purchases that add up or big-ticket items like a larger house or more expensive car.

Avoiding lifestyle creep can be vital if you want to invest enough for retirement. But the longer you’re accustomed to a certain lifestyle, the more difficult it is to cut back. That’s why it’s critical to keep your spending within reason even as your income rises. One helpful strategy: Any time you receive a raise, aim to invest as much of it as possible.    

4. Don’t underestimate the power of compound growth.

The earlier you start investing, the less money you’ll need to save in total to reach your goal. That’s because of a concept called compound growth.

Your portfolio balance will grow faster over time because you’re not just earning interest, dividends, and other gains on the money you’ve invested; you’re also getting growth on all the gains you’ve accumulated. The more time you have until you retire, the greater the impact of compound growth. In this example of the power of compound growth, if you invest $5,000 a year for 40 years (for a total investment of $200,000) at an average annual rate of return of 6 percent, you’ll end up with a balance of over $820,238—far more than the $200,000 you invested.

5. Not contributing enough to your 401k to get the maximum match is leaving money on the table.

A 401k is a great vehicle for building a nest egg because it’s automatic, freeing you from having to think about setting aside money toward retirement every month.

Most employers match up to a certain percentage of your 401k contributions. But if you don’t contribute enough to earn the full match, you’re leaving money on the table every year. And given the power of compound growth (explained above), every dollar you don’t add to your retirement account today can make a big difference in your balance when it’s time to retire.

6. Debt can keep you from achieving your retirement goals.

If you’ve accumulated sizable debt, it could prevent you from saving as much as you need to enjoy a comfortable retirement. That’s especially true if you’re carrying high-interest credit card debt.

During your 30s, it’s easy for debt to accumulate as you purchase a home or buy a larger vehicle to accommodate a growing family. Before committing to major expenses like these—or lots of smaller purchases that you charge but don’t pay in full each month—make sure you can afford them and still invest enough to reach your retirement goals. If you’re already carrying a lot of debt, find ways to scale back on spending so you can eliminate debt now while investing for the future.   

7. Small changes can make a big impact.    

Committing to large-scale changes so you can invest more for retirement is one way to make a big impact on your financial future. But it can be less overwhelming and more manageable to make small changes that add up over time. In fact, it’s proven that the easier the task, the more likely you’ll stick with it long term.

To boost your retirement savings in your 30s, commit to small changes like increasing your 401k contribution by 1 percent, dropping a streaming service you rarely use, or shopping for better car insurance rates (and of course, investing any money you save as a result).  

8. Investing for retirement is like any goal: If it’s not a priority, it probably won’t happen.

When retirement is decades away, it can be tough to make it a high priority—especially in the face of competing priorities like purchasing a home, paying for childcare, or saving for a young child’s future education.

To ensure you can fund the retirement you’ve imagined, you need to make long-range investing a top priority in your 30s. Steps like setting up auto-investments, committing to save your raises and bonuses, and periodically increasing your 401k contribution can ensure investing for retirement remains a priority, no matter what else life brings your way.

9. You can benefit from a financial plan that evolves with you.

In your 30s you might assume that if you’re contributing to an IRA or 401k every year, you have retirement planning covered. Maybe you’ve even run a few quick numbers and come up with a rough idea of how much you’ll need to save.

But retirement planning isn’t that simple. Many variables can impact how much you need to save to fund the retirement you have in mind—including when you plan to retire, how much your Social Security benefits will be, what your living expenses will be based on your anticipated lifestyle, how your savings are currently invested, and what kind of returns you can expect in the short term and long term.    

Wealth advisors at Marshall Financial can develop a personalized financial plan that considers all the variables, reflects your goals and dreams, and helps you achieve them. Whatever you see yourself doing in retirement, our planners can help turn your vision into reality—so you can live your happiest, healthiest, most productive life in retirement.

Contact Marshall Financial to schedule a retirement planning consultation. Or download our Guide to Planning Early for Retirement for more tips and best practices.


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