I’m 30! Am I where I should be with my finances?

I’m 30! Am I where I should be with my finances?

“I can't believe I'm going to be 30!” I told my Dad at the beginning of the year. As I had said the same thing when I turned 20, I knew he would reassure me that 30 actually wasn't that old.

“Nope, 30's old,” he said.

Getting older doesn't bother me; I actually embrace it and all the experiences that come along with it.

That's also something I say just to make myself feel better.

But it's working. And as I enter into a new decade of adulthood, I've been thinking about my financial situation. How much savings should I have at 30? Financially speaking, am I where a 30-year-old should be? What financial goals should I have at this age?

Let's find out.

How's My Retirement Plan Going?

Ah, the age-old financial question — how much should you save for retirement? It's been covered pretty extensively, and ultimately, it's about what works for you, as there are so many variables to consider. Especially with my fluctuating income, it's hard to set standards based on how much I earn. For now, I am saving based on last year's income, even though this year's might not be as high. I'd rather err on the side of saving too much, unless the difference becomes drastic.

Related >> How much do you need to save for retirement
Related >>Retirement savings: How much do you need?
Related >>The most important factor in retirement savings

But I should be saving even more for my retirement for two big reasons: 1) As I mentioned, my income may vary, so I should save a lot while I can. 2) I don't have an employer to match any of my contributions.

But before I decide how much more, how much savings should I have at 30?

Fidelity says you should have a year's salary saved in retirement by age 35. By age 45, you should have three times your income. Judging by that, I should probably have about half of my annual income saved today.

Our friends at Financial Samurai have this to say about where you should be with your retirement savings in your 30s:

Whatever the case may be, by the time you are 31, you need to have at least one year's worth of living expenses covered.”

Going by Financial Samurai's standard, I'm good. My living expenses are relatively low, so I've already reached that milestone. But by Fidelity's standard — half a year's salary — I'm almost, but not quite, there.

If I put in about $200 extra a month, I should have roughly half a year's salary in my retirement by the end of the year. I need to increase my contributions, but I'm already maxing out my IRA. And I hate to admit it, but, based on last year's income, I'm not even hitting the old 10 percent standard.

And here I thought I was doing well.

To my credit, however, last year was a good year income-wise. I may be over-estimating my savings, as this year I might not earn the same amount. But again, I'd rather save too much than too little.

It's due time to consider additional retirement options; I should probably already have opened a self-employed 401(k). Thus, Financial resolution #1: Save additionally for my retirement and open a new account.

Where Should I Keep My Medium-Term Savings?

As my 30th birthday approaches, I also happen to be at a fork with my emergency fund. I have more than six months' worth of living expenses saved and still have enough to pay taxes at the end of the year, since I'm self-employed.

But as I get older, there are certain milestones I should start saving up for. A house? Children? Another cat? Who knows! I'm still not quite sure if I want any of those things within the next five years. But I'll probably make a decision within that time frame, and I'd like to be financially prepared either way. Now is the time to start saving for whatever the near future may hold.

My 20s were spent getting out of debt and building an emergency fund. I feel like 30 is an age at which I need to start being proactive with how I'm saving. As J.D. once wrote:

“If you hide your money under a rock, your investing skill isn't particularly good. Although you might think you're protecting what you've saved, you're actually losing money to inflation.”

Related >> Is investing optional?

So I've been investing in my investment education. I've diversified my IRA, and my ROI is pretty average. As a novice, I'm OK with average for now. But while I continue my investment education and also decide what it is I want to save for, I plan on doing a couple of things.

Between three and five years is the time frame that I think I might need this money — maybe longer. While I'd like to open an index fund, I'm a little concerned about the risk, especially if I end up wanting the money in the semi-short term. Opening a CD is an appealing option, but the rates aren't that much better than my savings account.

I can open one or the other, or I can split my savings between both. It's a decision that I'm in the process of making, and I'll let you know how it goes. In the meantime, the point is, at 30, it's about time to start saving smartly. Financial resolution #2: Decide where I want to park my medium-term savings.

Preparing for and Safeguarding the Future

It's time to make a risk-management checklist. Oh, that's right. Robert Brokamp already did this for me! He's great like that.

It's time to visit some items on this list. That's my third financial resolution: Prepare for and safeguard the future.

I won't rehash Brokamp's entire list. Some items won't apply to me for a while; some I've already got covered. But there are a few things that I'll need to work on as the future nears.

Asset Protection

While I already have renter's and auto insurance, taking an inventory of possessions is a great idea, and umbrella insurance is something to consider, too, although I don't have that many assets.

“Your personal tragedy will be less tragic if you can prove to the insurance company what you owned,” Brokamp writes.

Indeed. Years ago, I worked at a small engineering company. Our building caught on fire one morning and burned to the ground. I spent the next six months interviewing everyone at the company and taking an inventory of every single asset. Amid so many other frustrations, my boss told me that we'd likely have to prove much of what we were claiming.

Thus, part of my third resolution is to follow Brokamp's advice by taking an inventory of my possessions and looking into risk-management checkpoints for the near future.

Preparing a Will

I hate to admit it, but this is something I haven't thought about much, despite its importance. Preparing a will, along with other important documents Brokamp mentions, is another financial goal as I turn 30.

I got out of debt and saved some money in my 20s, and maybe that deserved a pat on the back. But as I enter the next decade, it's time to enter the next era of my finances. I've only listed a few major financial resolutions here, but some of them already seem challenging, and there are probably more I'll discover along the way.

On the bright side, not only will my finances be in better shape, but some of these goals might make for decent GRS topics. Personally, I'm interested to learn more about self-employed 401(k)s and where to put my medium-term savings.

Are there topics you'd like to see fleshed out? Do you have any additional input on what a 30-year-old's financial goals should be?

More about...Planning, Retirement

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Justin
Justin
7 years ago

Welcome to 30. I just hit that milestone in August, so I know where you’re coming from.
It can be pretty intimidating to think of retirement when you’re still so young. After all, it’s what 30-35 years away? Still the numbers given seem like a good rate to hit if you want to retire then.
I’m still not quite where I should be, but definitely working hard on a plan that’s similar to yours.

Apple
Apple
5 years ago
Reply to  Justin

Rule #1: Pay yourself FIRST. Rule #2: Don’t let greedy salesmen/brokers/agents take any of your money in fees, commissions, loads, etc. Do the paperwork yourself with a discount broker – Fidelity, Vanguard, TD Ameritrade, etc., then invest in no-load mutual funds with no front loads, no back loads, and certainly NO 12b1 FEES whatsoever. It will make a difference of hundreds of thousands of dollars by the time you retire! Rule #3: Don’t waste money on stupid stuff you don’t need. Don’t get $100/month smart phone. I pay $20/month with tMobile. Don’t get $100/month auto insurance. I pay $24/month with… Read more »

Alex
Alex
7 years ago

If you are looking for advice on where to park your medium term savings, then I would place somewhere based on your risk tolerance. If you are not a fan of risk and do not want to loose the money, then I recommend placing it in an online bank or Money Market Account. Many Money Market Accounts beat the rate of CDs plus your money is accessable in case of emergency or an event happens sooner than you thought. I think it is hard to accurately predict when one will get married. So it is nice to be able to… Read more »

Sam
Sam
7 years ago

If you’ve got your debt under control at age 30 and even in your 20s put away money in your retirement account. If you save earlier you are so much better off, due to the power of compounding interest. I would make retirement savings a priority for sure.

nicoleandmaggie
nicoleandmaggie
7 years ago

Why do you need a will? We didn’t get them until we had both children and assets to protect.

Beth
Beth
7 years ago

I am with N&M. If you still rent, you don’t have kids, and you don’t have much by way of assets, you don’t really need a will.

TheGreedMachine
TheGreedMachine
7 years ago
Reply to  Beth

This couldn’t be further from the truth. Regardless of your assets you have an obligation to your family and friends to make the process of handling your estate as clear and simple as possible. Additionally, you should also make it known how you would like your remains to be handled and your wishes with regards to life prolonging medical treatment.

Jamie
Jamie
7 years ago

I agree with TheGreedMachine. Above a will my priority would be an Advance Health Care Directive (to give instructions about life support, handling remains, organ donation, and assigning a Medical Power of Attorney) , but a will is still very important. Amidst mourning my death, I would hate for relationships to be strained between my loved ones because no one know who’s entitled to what.

Even if you don’t have property or children, there will be plenty of items and accounts that will need to be handled.

lmoot
lmoot
7 years ago

As someone who may not have kids I want to emphatically declare that a will is not just for folks with children. A will is helpful because it lists your assets that your beneficiaries may not know of, also it insures that your assets are distributed to your liking.

Even if I had kids, all of my assets would not go to them. There are family, friends, and charities I would also want to give to.

Megan E.
Megan E.
7 years ago

Another advantage of a will is to protect yourself in case of coma, paralysis, etc – so that others know what legally should happen to you. Also, if you have assets, it can help with getting them to parents, charity, etc and it can help with protecting animals, belongings, and so forth.

I think anyone who is “on their own” should have a basic will, even just saying “Pull the plug after 24 hours, give my cat, Fluffy, to my best friend, and sell my belongings and donate them to Habitat for Humanity.”

Lucas
Lucas
7 years ago
Reply to  Megan E.

Just FYI- you can do that with a advanced medical directive (not a will). Doing your own will though is increadibly simple! I advise everyone to do their own will and medical directive. Living trusts are a little more complicated (and probably unnecessary if you don’t have a large amount of assets) but not to bad (i would recomend paying for the template legal forms online for $50 or so instead of paying some laywer $1000+ to do it for you).

lmoot
lmoot
7 years ago

Exactly. I completely forgot about pets. I know NicoleandMaggie probably didn’t mean it in a derrogatory way, but I’ve noticed a trend of “foot in mouth” comments from people who don’t seem to remember life before the spouse and kids, or house. Just because you don’t have children or all of the better known assets like a house, car, rental properties..etc, does not mean that you or your belongings or pets, friends, family, life partners, charities are any less worthy of being protected and covered.. I’ve written a lot of poetry and short stories, you better believe those are going… Read more »

Marsha
Marsha
7 years ago

If you’re happy with the way your state would divide your belongings after your death, then you don’t need a will.

If you enjoy the thought of your relatives fighting over your assets after you’re dead, then you don’t need a will.

If you don’t mind the thought of your prize heirlooms being sold at auction to strangers, rather than go to a family member who will cherish them and pass them on, then you don’t need a will.

Mom of five
Mom of five
7 years ago

Wow! You’re doing great. Trust me – thirty’s not old. You’re still a babe. It’ll be interesting to follow your financial journey. I’m going to go against the crowd and say keep your retirement on autopilot (maybe up it a little) but that it’s probably more important to focus on your personal savings at this point in your life. The thirties are often a time of huge changes and any one of the following could require a huge outlay of cash or at the very least will mean big financial changes: marriage, children, buying a house. Having a nice cash… Read more »

Kristin
Kristin
7 years ago
Reply to  Mom of five

Interesting point, MOF, and definitely something I’ll consider. I think it’s easy to underestimate just how big those financial changes are! I still think I need to open another retirement account, but perhaps I do need to reconsider how much I contribute.

Thanks for the input!

rjack (Mr. Asset Allocation)
rjack (Mr. Asset Allocation)
7 years ago

First off, 30 is not old!

Second, a will is a good idea once you have some assets which you do. I used WillMaker to do my will and it is pretty easy to use.

TB at BlueCollarWorkman
TB at BlueCollarWorkman
7 years ago

My wife and I only have our mortgage left to pay off, so that’s good. Compared to the average American, I think my wife and I are doing good. But on some blog recently I read how being better than the average American when it comes to finances isn’t really all that great, haha.

Malcom
Malcom
7 years ago

I read the the same article. I believe it was on wisebread.com

My Financial Independence Journey
My Financial Independence Journey
7 years ago

Aggressive saving and investing is what my financial life in my 30s is all about. My 20’s were spent in various forms of education and training, so now is the time to press ahead with building my investment portfolio.

Harvey
Harvey
7 years ago

30 is a great age to do a big financial review. I took stock of mine when I was 34 and it was a little late, but I’m pleased to see by your post that I am more or less on track with retirement planning (I have a year’s salary in at aged 37). I also think your 30s are a great decade for trying out different investment strategies and as you are still young (honest!) you can test out some higher risk ones. My partner loves investing in limited edition prints and has found she has quite a talent… Read more »

Ivy
Ivy
7 years ago

These rules of thumb are fine as general guidance, but not something set in stone or working for everybody. Our 20s were time to invest in ourselves. At 30 my husband and I had negative $140K of debt, mostly student loans. We are 39 now and we are out of debt and have indeed close to 3x annual salary in retirement accounts/cash. The investment paid off for us. If we had gone by the rule of thumb, we would have never gone to business schools taking on a huge debt so close to our 30s, we would have never bought… Read more »

Adam - HireMeHigherEd
Adam - HireMeHigherEd
7 years ago

Never heard those rules of thumb, but they are interesting. I am only 28, but I believe on track to meet that goal. Also, my wife and I have been talking recently about a will, since our daughter is now almost 9 months old.

Courtney @ FamilyGoneHealthy
Courtney @ FamilyGoneHealthy
7 years ago

My husband and I are 30 and 28, respectively, and I think we are doing pretty well as far as retirement savings goes. We have more than a year’s worth of gross income in retirement accounts, as well as 6 months of expenses in a savings account. Next, we need to work on our wills and creating a trust in case something happens to both of us (we have two young daughters).

Matt
Matt
7 years ago

I have to say, this article scares me a little bit. I’m about to turn 30 in June, and I’m not even close to this. Unfortunately for me, I just started on the road to financial health and right now I’m literally paying for the financial mistakes of my twenties. I was a student for the better part of ten years, went to law school, and have now started my career. I don’t make amazing money, but I’m honestly just happy to have a job. I’m severely in debt from student loans and credit cards, but I’m happy to say… Read more »

C
C
7 years ago
Reply to  Matt

If you are carrying high-interest credit card debt, your top priority should be paying that off and/or getting it into a lower-interest form of debt. Seriously, I would only consider retirement savings if there were something like a 401(k) with employer match available, and then I would only contribute the minimum needed to get the match. High interest debt will kill you. Once you have your higher interest debt taken care of, you have to figure out what the “right” balance is for you in terms of paying off a loan vs. saving for retirement. If your student loans are… Read more »

Mom of five
Mom of five
7 years ago
Reply to  Matt

You’re still young. My husband and I were pretty much in your shoes when we married nearly two decades ago. The legal job market wasn’t as tight then, but the loans and credit cards were just as crippling. I think the main reason we’re doing so well is that we resisted upping our lifestyle too much. Many of our friends from those days upgraded quickly into fancier homes. Most of them upgraded to fancier (leased) cars as soon as they could afford the payments. Don’t do that! If you can, try to put something away for retirement. If you can’t,… Read more »

Chuckie
Chuckie
7 years ago
Reply to  Matt

Matt… I’m in a similar situation. One thing that my wife and I continue to do (at ages 30 and 31) is aggressively pay down our remaining low interest student loan debt for the sake of freeing up cash flow. Being fresh out of law school and having been in higher education for 10 years, I’ll bet Matt’s and his wife to be’s student loan payments and those credit card payments are absolutely murdering their cash flow. The best advice I have is tackle your debt one loan at a time. The debt snowball (i.e. paying off debts with the… Read more »

jim
jim
7 years ago
Reply to  Matt

Matt, Spouse went to law school and when she graduated we had my undergrad loans too(parents were divorced and I didn’t get a dime of support from them – actually dropped out of school during “construction” season to earn $ for the next semester – but it was never even close to enough – so I had a lot of undergrad loans). Add spouse’s law school loans on top of that and a kid (later a second kid) – trust me it took awhile to get on top of that situation. However, one thing I will tell you – just… Read more »

Matt
Matt
7 years ago
Reply to  Matt

Thanks everyone, I really appreciate the comments.

Edwin
Edwin
7 years ago

Happy Birthday, I’ll in the same place where you are now. I will be 31 this July. You have a lot to think about but everything sorts itself out if you take it a step at a time. A couple of tips I can share with you is invest in index funds for your retirement. If you are going to have more than 1 account among your retirement account look at them as 1 whole portfolio. Pick an asset allocation composed of US Stocks, International, and Bonds. If you have no idea a general rule would be hold your age… Read more »

Nancy
Nancy
7 years ago
Reply to  Edwin

What do you think of target date retirement funds?

Matt Becker
Matt Becker
7 years ago

A Solo 401k is a great idea. My wife and I are in a similar situation in that she is part-time self-employed and I have no employer plan, so at this point we have only IRAs as available retirement accounts. But this is the first year she’ll be making a profit with her business, so we’re definitely opening a Solo 401k for her and maxing it out. It’s a great way to take advantage of as many tax breaks as possible for as long as you can!

Kingston
Kingston
7 years ago

The Brokamp link goes to a quiz on entrepreneurship, not to a risk-management checklist.

Carol C
Carol C
7 years ago
Reply to  Kingston

I noticed this too. Thank you for commenting. Hopefully the link will be fixed.

LeRainDrop
LeRainDrop
7 years ago
Reply to  Kingston

Yup, I noticed this too, but google helped me out (since GRS archives are not searchable or available organized by author!): https://www.getrichslowly.org/a-risk-management-checklist/

BC
BC
7 years ago

At 37 I think about this all the time! My DH entered his PhD program in a pricey urban area at 30 and so it delayed some things for us. By Fidelity’s measure we are behind but there are other factors to consider: -Since our 4 year old was born we’ve paid $60k out of pocket for childcare/insurance costs -We had to pay cash out of pocket for two interstate moves for academic positions in the past year to the tune of $10k total -My employer has a great pension program, if I left today I’d collect $1k/month at retirement… Read more »

Ben
Ben
7 years ago
Reply to  BC

Don’t forget that your moving expenses and medical are tax deductible if you itemize!

lmoot
lmoot
7 years ago

Wow, I’m surprised that the retirement recommendation is so low! I though I was way behind on retirement, and I have 1/2 of 1 yr income at 29 (in my 401k and ROTH). I guess I feel a little bit better about that because I don’t plan on upping my contributions any time soon. I’m desperately trying to save for rental properties as I’m hoping to use that a decent portion of my retirement income (both through rental income, and through holding and selling, right before I’m ready to leave the job market permanently). I always felt exposed by not… Read more »

El Nerdo
El Nerdo
7 years ago

Hey, this isn’t the hippie era anymore, so don’t worry, you can still be trusted.)

I noticed your sentence wondering about retirement for the self-employed.

I highly recommend this book that was reviewed here “way back when”:

https://www.getrichslowly.org/review-the-money-book-for-freelancers/

I bought the book. All-around good stuff.

Kristin
Kristin
7 years ago
Reply to  El Nerdo

El Nerdo!

Thanks so much for the recommendation. The review was interesting; I just bought the book.

On another note, I’m sad that you’re not writing regularly anymore, but I really enjoyed your giant pumpkin article and wish you the best of luck in tending to it! Glad to see you’re still active in the comments, and I hope you’ll keep in touch.

El Nerdo
El Nerdo
7 years ago
Reply to  Kristin

Thanks! Best wishes to you too, and I hope you like the book. Oh, btw, I clicked on your name and saw your website– nice! And those videos are fun!

Mr.Bonner@bonnersbillions
7 years ago
Reply to  El Nerdo

Whoa, whoa!!! You BOUGHT the book? This is GRS…what happened to the good old fashioned library 🙂

El Nerdo
El Nerdo
7 years ago
Reply to  El Nerdo

Ha ha ha– the library didn’t have it when I needed it (and they still don’t have it two years later).

My business values timely information more than the $10 or so I paid for it when I bought it.

Waiting for the free version would have been penny-wise but pound-foolish. 🙂

Plus, I like to support freelancers who write for the freelance niche. I feel it’s an underserved market vs. all the available advice for traditional “job” people, and my money helps ensure we get the research and advice we need to thrive.

Megan E.
Megan E.
7 years ago

A good article for me, as I’m also turning 30 this year. I do find that this is a time for reflection as 20 never was. For me, though, I’m still in a similar place (ie, school) so it’s hard to feel like I should be further ahead than I am. That said, I am contributing to retirement as much as possible and we are trying to set up for whatever comes next.

I think your plans sound good for you, especially the SE retirement.

Samantha
Samantha
7 years ago

Wow, very similar to me. I’ll be 30 in a few months. My husband and I have some things down pat, and working on building others. We’ve paid off all debt but the house, and saved up 6 months expenses. (The house should be paid off next year.) We’ve got our wills and life insurance in place. I’d like to hear more about umbrella insurance. The medium-term savings we are struggling with as well! Right now its just in a savings account and interest rates are very, very low. We don’t know when we’ll spend this money: vacations and home… Read more »

mike
mike
7 years ago

First , I dont know your situation but six months savings for an emergency fund can turn into 1 month real quickly if a large issue occurs or a series of mid-size smaller issues. Furthermore with your work situation 1 year atleast would be suggested. We always keep 2 years expenses in cash, pure and simple, most in a sallie mae MMA currently earning .95%. Second, 30 isn’t old but now is the time to kick those savings into gear. In the current market I would suggest thinking about capital preservation instead of capital appreciation. Searching for yield sounds good… Read more »

Mrs PoP @ Planting Our Pennies
Mrs PoP @ Planting Our Pennies
7 years ago

Welcome to the 30 Club! Mr. PoP and I joined about 6 months ago. =)

By the Fidelity/Financial Samurai measures, we’re doing pretty well.

But our financial goal for our 30’s is to work on diversifying income streams so we’re less dependent on the 9-5 corporate grind.

We’ve also got the secondary goal of figuring out what our lives are going to look like in 10 or more years (a lot like you – kids? more cats? maybe even a dog someday?). And that goal actually seems harder to achieve…

Ely
Ely
7 years ago

Interesting. I am nearly 40 – and I have nearly twice my income in my retirement accounts. I’m on track to beat that magic number by my actual birthday.
Go me.

Tom
Tom
7 years ago
Reply to  Ely

Nice work!

Family Fandango
Family Fandango
7 years ago

One of the best pieces of advice I ever got was from my Uncle John, back when I got my first “professional” job – one that came with a 401K AND a 403b. He showed me how investing in the 401K would pay out over time, and encouraged me to put the maximum amount in every month. To this day I am way better off than most of my peers in retirement savings. It’s the day to day bucket that is too close for comfort…

tmr
tmr
7 years ago

Yeah, this is exactly where I am. By the time I turned 30, I had over $100K in my retirement account. I’m still very, very good about that. However, the emergency savings account is something I just cannot manage to fund enough, ever. Even at its best, it’s three months of expenses. Which would be okay, except that I work in an industry where people can lose their jobs fairly easily.

Tim
Tim
7 years ago

Kristin, One suggestion for a portion of your medium-term savings: a Guggenheim Bulletshares High Yield Corporate Bond ETF. These are bond funds where all the individual bonds expire in the same year, and the ETF distributes all cash at the end of the year. For example, the 2016 fund trades under symbol BSJG, holds 70 different bonds with an average maturity of 4 years, and no bonds maturing after 2016. It pays interest monthly and has a weighted averaged yield to maturity of 5.45%. A fund like this eliminates the risk of losing money due to interest rates changes as… Read more »

kate
kate
7 years ago

I enjoyed this article as well. I turn 32 in June, and I think I’m in a pretty good place. This piece confirmed that for me. I spent my 20s carrying around $5k of credit card debt. It was “no big deal” because it wasn’t that much money, I could pay it off in a few months by digging into my savings, and it never really went up. But it occurred to me recently that it also never really went down – I’d make a big payment and then add a few small charges, and be right back in the… Read more »

Marsha
Marsha
7 years ago

I strongly encourage you to save as much as possible for retirement, and the younger the better. My husband and I started saving for retirement when we were in our late 20s (the first time we had 401k’s available). We’ve saved an average of 10% of our income for retirement for the last 25 years, and we now have about 8 times our yearly income in retirement accounts. We never saved a crazy-high percentage for retirement (we were fortunate to have employer matching) but the power of compound interest/reinvesting dividends has really paid off. Most years, our investments grow by… Read more »

Buy & Hold Blog
Buy & Hold Blog
7 years ago
Reply to  Marsha

Really great advice. We are in mid 30’s with only me working, Mrs. takes care of the baby. I started investing when I was 25. I’ve not looked back ever since. I’ve increased investments substantially during the recession. I can easily see the the compounding effect too.

The advice in this article is great. I need to work on my will.

Marsha
Marsha
7 years ago

Good job so far. Just keep plugging away and don’t get discouraged with market downturns. I was home with our kids for many years so I know how much more important it is to save when you’re a one income family. We did it, so can you.

Buy & Hold Blog
Buy & Hold Blog
7 years ago
Reply to  Marsha

Thanks for being an inspiration to us.

Nick @ AYoungPro.com
Nick @ AYoungPro.com
7 years ago

Really interesting, thanks! I’m 30 in two years so it is very applicable to me. 🙂

Angie
Angie
7 years ago

I am on the verge of 40, so let me just echo that 30 is most definitely not old. You have some great years ahead of you 🙂

jim
jim
7 years ago

Marsha, Spouse and I are a few years older than you and we don’t have near 8 times our income saved for retirement. We didn’t finish school until we were 28 years old so we didn’t start saving for retirement until we were in our 30’s (had to get those student loans paid off). Then with kids, etc we saved but not at 15% – we’ve got 3 more years of funding higher ed for our youngest and then we’re going to live off of our lowest income and invest the rest for a couple of years before we retire.… Read more »

Marsha
Marsha
7 years ago
Reply to  jim

You’ve got to do the best with the years you have left to work. In my opinion, if you’re in your late 50’s and behind on your retirement savings, you shouldn’t be helping your kids with college. You should be putting away every possible penny into retirement savings. If you end up with money saved that you don’t need in retirement, you can help them pay off their student loans early. We have a college sophomore and a high school senior. We are able to help our children with their college expenses because we’re on track with retirement savings, they… Read more »

jim
jim
7 years ago
Reply to  Marsha

Marsha,
Thanks much for the input. Appreciate it.

Mom of five
Mom of five
7 years ago
Reply to  jim

Jim, my husband is 52 and I’m 47 and we currently don’t have 8 times our income saved either. However, if we add nothing to our retirement accounts we could still get by well enough in retirement (barring a complete financial meltdown of course). Right now, so much of our income is spent on our children and will be for the foreseeable future. I don’t think it would be an exaggeration to say without kids and with some belt tightening we could live on a tenth of our current income. And once our mortgage is done, we could live on… Read more »

jim
jim
7 years ago
Reply to  Mom of five

Mom of Five, Thanks for the input. I’ve read your posts (on vaarious sites) in the past and have always really liked them. Raising our income is simply not going to happen – we’re in our mid-50’s and are grandparents so we’re spending our “free” time with the little ones. We did pay for our kids’ undergraduate degrees so they could graduate debt-free (since we both struggled really hard during undergrad/grad school with no financial support from anyone). Only now we’re looking at helping our youngest with law school – just when we thought we’d start really paying down on… Read more »

Kristin
Kristin
7 years ago

Really appreciate all the feedback, input and advice. I tried to keep up with the comments throughout the day, but work got in the way…darn work always getting in the way.

But yeah…lots of stuff to mull over here. I’ll have some update posts, I’m sure.

stellamarina
stellamarina
7 years ago

Hey….when I was 30….the idea of saving for my retirement did not even enter my brain. I had some vague sense that the government took care of all that! :0) I was a stay at home mom so no personal income. Only when I started working at 40 did I wake up to reality as I learned about retirement accounts. You wonderful young’uns are going to have the magic of compounded interest working for you.

Financial Samurai
Financial Samurai
7 years ago

Hi Kristin,

Welcome to your 30s! I think you’ll enjoy the time immensely as you catch your groove. One thing to note is how much Faster time goes than in your 20s. It’s kinda scary actually.

Seize the day and enjoy every minute. Whatever you are afraid of, tackle it head on. It’s never as bad as you think. I enjoyed reading your post.

Cheers,

Sam

Mr.Bonner@bonnersbillions
7 years ago

We’re in our early 30’s and I’d like to think we’re doing well, but we’re not in the home we planned on raising our two boys in, so while our retirement savings is pretty good (~1.5 gross annual income) much or our savings is short term for a down payment in the next few years. The market is too high for me to poor money into index funds right now, so I’m looking at alternative investments for the next 3-5 years such as peer to peer lending. A lot of personal finance blogs have written favorable of Lending Club, so… Read more »

Mom of five
Mom of five
7 years ago

Good Luck with the Peer to Peer Lending! I’ve heard good things about it but quite frankly lack the nerve to take the plunge.

Derek
Derek
7 years ago

I turned 30 in September. Just before that I decided to completely change my financial outlook and practice. I was a graduate student until I was 29 and hadn’t saved much at all, in fact I accumulated debt. I went from having about $14K in debt and little retirement in August to having $0K, several thousands of liquid savings, and a few tens of thousands in retirement as of today. Meanwhile I’ve been read over 75 personal finance books since August as well. I’m quite upset I didn’t start all this much earlier. Not only would it have given me… Read more »

Ramblin' Ma'am
Ramblin' Ma'am
7 years ago

I’m 30 and have a little less than a year’s salary saved in retirement. Based on the yardstick in the article, I’m doing well, but it doesn’t feel like that will be enough.

Brian
Brian
7 years ago

Long time reader, first time poster here!!! Loving all the comments posted. I’m 28 and have about a year’s salary saved. Fortunately I had minimal school loans to pay off, but what really helped was living with family the first few years out of college. Yes, I missed out hosting parties, staying up way late, etc., but I was able to save lots of money that would have otherwise gone to rent. I then took the money saved and invested it in the stock market in early 2009 and was able to make some more there. I didn’t catch the… Read more »

Andy
Andy
7 years ago

Another suggestion for short to medium term savings/investment:

RiverPark Short Term High Yield Retail (RPHYX)

This bond fund is unique in that it picks up the last few months of duration on an outstanding bond. Its objective is to minimize risk rather than maximize returns. It averages about a 3.5-4.0% annual return with nearly linear growth. Check out a detailed review here:

http://www.mutualfundobserver.com/2012/09/riverpark-short-term-high-yield-fund-rphyx-july-2011-updated-october-2012/

Tim
Tim
7 years ago
Reply to  Andy

That’s an interesting one. The fact that it’s a mutual fund instead of an ETF is a mixed bag: it has higher fees (1.25%, which reduced the yield a lot) but no transaction costs so you can put in small amounts of money on a regular basis. Good suggestion!

FF
FF
7 years ago

C’mon, 30 is the new 25. I think you’re doing just fine. Those rules of thumb are tough to hit but kudos to anybody who pulls it off. I think it depends a lot on what you’ve done with your life (some people do a bunch of school etc, maybe spend a few years after college surfing or whatever, while some are go-getters who grab a high paying job right away). No path is better than another as long as you do what fits you and can live with the consequences. I wasn’t anywhere near those targets at 30, but… Read more »

Lyndsay
Lyndsay
7 years ago

This is a great, clear financial plan. You’ve got savings and a roadmap to financial stability.

As a lot of these plans progress, I think it’s smart that a lot of people around 30 take on some more risk by investing, starting with mutual or index funds.

Ivan
Ivan
7 years ago

Kristin, I’m really impressed that you’re looking into asset protection and preparing a will! I haven’t thought of doing either one. But they are smart things to do for sure! Regarding your financial resolution #2, it certainly makes sense to split your savings between both. But you could take it one step further than that. You could start with a 50/50 split in the first year and then adjust the percentages each subsequent year. If you find that you are less and less likely to need the money as time progresses, you can start shifting your money towards the index… Read more »

Lucas
Lucas
7 years ago

Investment companies recommendations are pretty much all wrong. You shouldn’t be baseing what you need in savings/retirement on your income but rather your expenses.

Calculate these three ratios to help you see the issues:

Debt/Networth
Networth/Annual_Income
Networth/Annual_AfterTaxExpenses

You ultimately need a 33+ on the Networth/Annual_Expenses and hopefully a 0 on the Debt/Networth to be set forever financially. The Networth/Annual_Income isn’t as helpful in determining where you are at, but it can be helpfull in determining how good you are at savings.

I am 29 and my numbers are 0,5,19

Tom
Tom
6 years ago

For medium term savings, I would recommend looking into Harry Browne’s Permanent Portfolio strategy. Highly diversified and stable, but with enough volatility to produce decent returns.

You can go really pure with it and own the assets outright or buy funds for each asset or if either one is too much you can buy one of the funds that have been set up to work similarly to it – PRPFX, or the new ETF, PERM.

Neil
Neil
6 years ago

I think you have a great article here. I was wondering if you can offer some advise on my 401k situation here. I am almost 30 and have never contributed to 401k or any other retirement plan and I started working when I was 26. I know that was not very wise of me to not invest. Regrets!! I make 125K-150K a year. What is your advise going forward for me? How should I invest and what different plans should I invest into, to possibly compensate for the loss by not investing so far in any retirement plans. My employer… Read more »

Medicine man
Medicine man
5 years ago

I am 29 years old bought a beautiful home 4 years ago for 315,000. It will be paid off by the time im 40 and should appraise for around 375,000. Because of my mortgauge I only have 11k saved in my IRA. So these message rooms always have me worried becuase I don’t have a years salary in retirement by age 30 but I will have my home paid off by 40. I haven’t seen my scenario in any of these retirement forums. Right now I have 125k worth of equity in the house but am I still on track… Read more »

JJ
JJ
5 years ago
Reply to  Medicine man

This can be a tough call, but I would suggest hitting the retirement savings before paying down the mortgage. Your return on paying down the mortgage is basically the interest rate on your mortgage, so if you’re paying 5% on the mortgage, that’s your gain by paying it down faster. On average, good, well diversified investments are going to do better than 5% over the long term, so unless you have a high interest mortgage, which if you bought 4-years ago isn’t likely, you’re going to be better off by investing in a retirement fund before you pay down your… Read more »

jack
jack
5 years ago

Hah, if you think you’re old at 30 what will you think at 40, 50, 60? Fuzzy feelings aside, my opinion is that 30 is far too late to “get serious” about saving. This should have happened in the late teens/early 20s when you got your first job. Changing the variable of time in a compounding interest equation can give you a massive advantage. Massive.

Aeon
Aeon
4 years ago
Reply to  jack

You are very misinformed if you think the average person is able to save for retirement in their early 20’s. Consider the degradation of the value of the bachelors degree and the surging cost of education. Most people aren’t able to save until their 30’s and in some cases that is optimistic.

Personally I got lucky with a great job so my wife and I are on track to a great early retirement in our 60’s but this is not the norm and believing so is short sided and misinformed.

K
K
4 years ago
Reply to  Aeon

If you are taught at a young age it is perfectly reasonable to be saving in your 20’s. I started saving with my first job at 18.

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