Maneuver toward retirement: What to do in your 30s


For most people in their 30s, life can feel like a breathless uphill run on a downward escalator. Everything seems to expand: families, homes, social circles, career responsibilities, and income. Managing it all requires more of your immediate attention, so it's not surprising that retirement planning tends to fall lower on the list of high priorities. For many, just making it through the day is all the long-term planning they can handle.

But the future — and your retirement — isn't going to give you a pass because you had so much on your plate when you were 30-something. Fortunately, there are some simple things you can do in your 30s to start maneuvering toward retirement even if you're stretched thin right now.

Adopt an effective mindset

Key to solving this dilemma — a future demanding attention and a present with no time — is to keep the mindset that supports retirement goals uppermost. If you don't push yourself to think about retirement planning, it won't get done and you will slowly eliminate the opportunity to make time work for you. (Not to mention how difficult planning for retirement will become if you start in your 40s or 50s.)

On the other hand, if you keep retirement planning uppermost in your mind in your 30s, you naturally set a framework for your decision-making process. You begin to recognize that certain decisions make it more difficult to reach financial independence but others can help you reach it — like these, for instance:

Taking on debt makes reaching retirement more difficult…

The biggest trap of a raise is thinking it enables us to make higher payments. Any financial strategy involving making payments is often not the best one for your retirement. Case in point, when we lived in Southern California, leasing cars was very popular. And every time a coworker of mine got a raise, it wasn't long before she sported a better car, with most of the raise going to the higher lease payment. My boss and I convinced her that using her promotions and raises this way was effectively stealing from her future. We kept prodding her to get out of that trap, and she has thanked us many times for helping her see it as a problem.

… BUT curbing lifestyle inflation can help you reach financial independence faster

That rising income brings enticing options. You can afford a bigger home, a nicer (and newer) car, better eating establishments, classier places for shopping, and vacations where you don't have to brush the ants from your pants every morning.

Young family playing in the woods

Endless opportunities present themselves on a daily basis, but the decision to afford these things comes with a price. Once you indulge in one area, it becomes harder to say no to the next opportunity.

Granted, nobody likes to use upside-down milk crates covered with paper towels for furniture the rest of their lives. However, the key to future comfort is accepting the dictum that if you could get by before your raise, you can afterward too.

You may have read about several of the people we interviewed on Get Rich Slowly a few months ago who mentioned that the key to their financial well-being was getting — and staying — out of consumer debt. Their decisions were guided by a mindset that kept planning for their futures uppermost in their thoughts.

Doing so kind of frees you up to focus on the things which specifically help you progress toward retirement. And as it is with so many things in life, some of those tasks are easy and some less so. Let's start with the easy ones:

Easy things you can do to maneuver toward retirement

1. Automate employer contributions: One of the nice things technology affords us today is the beauty of automating your contributions. It's something many people overlook — but it's an easy thing to fix. You can set and forget your contributions to your savings account for emergencies, your Roth IRA and employer retirement plans (401(k), 403(b), etc.).

By the way, your 401(k) plan should not be your only retirement planning method. A traditional or Roth IRA offers you a much wider array of investing options, including index funds not available on your employer's fund menu. Furthermore, they come without the burden of employer plan fees.

Fortunately, you can automate your IRA contributions too. And that's important because you can never make up a passed year on your IRA, perhaps the best retirement vehicle out there. Without automation, chances are you might forego the benefits an IRA may have. Time flies fast, after all. When you blink, the year is gone. So if you don't automate your contributions, you might very well find it impossible to make your full contribution before the window slams shut with the calendar.

You can also automate your emergency fund savings account, CD or money market account. Here are some options for where to open your account:

2. Harness your windfalls: Add any bonuses or gifts to your savings, CD or Roth IRA account. Simply act like you never received them — or pretend that they were given to your future retired self (not your present self). It's easy to do if you make up your mind ahead of time.

We have a friend who gets a sizable bonus every year. She never knows the exact amount, but she has a fair idea. Every year, as summer ends, she begins to think of all the things she will buy with the coming bonus. To her credit, she doesn't buy them ahead of time, nor does she spend more than the bonus amount, but by Thanksgiving there is nothing of the bonus left … and, likewise, nothing is invested or saved.

I broached the topic (gently) a time or two, but she sees that bonus as something she earned and, by golly, she is going to get her jollies out of it … this year. I've tried to think of a name for it like “lifestyle inflation,” but this is slightly different, more like an annual spree of entitlement. Don't do it. It's much easier if we decide ahead of time to dump all those unplanned income items into the IRA, CD or savings account before our greedy, entitled little minds begin spending them.

There are other things to help you take care of your retirement, but which are not quite so easy.

Not-so-easy things you can do to maneuver toward retirement

3. Focus on career advancement. It may sound like it doesn't have anything to do with retirement, but it does. The less you make, the less you can set aside for retirement. Therefore, anything you do to advance in your career improves your ability to take care of your retirement planning.

Take all the training opportunities your employer offers you. You're already on life's treadmill, why not make some of that an investment in yourself? The more you earn, the more you can invest with the automation method mentioned above too.

It may sound obvious, but I've met more than a few people who pass up on opportunities for advancement simply because their current situation is comfortable. They forget that even if it is a sacrifice in the short term, a job with higher earnings can bring future rewards … which may last a lot longer than the passing discomfort of the present. Not to say that money trumps all, but it is important to keep in mind that those decisions may have profound retirement implications, and that retirement may last a lot longer than a few years in an unpleasant assignment. Sacrificing the present for the future has many faces.

4. Budget: I've not met anybody who relishes the idea of willfully depriving themselves for the sheer joy of it. Yet, almost every person who has done well on a regular income says that budgeting was critical to their success. Some budget meticulously, others loosely; but everyone who has succeeded financially has done so with a budget.

My wife and I started with Larry Burkett's envelope system. It felt weird in the beginning; but within a few months, it became just another good habit. Today, we don't even think of being on a budget. On the other hand, planning for your retirement without a budget is almost impossible.

Most important thing to do to maneuver toward retirement

5. Make investing a habit: This harkens back to the mindset alluded to earlier. When you started out working, you made what someone euphemistically call “young money,” a flattering term for entry-level wages. Nobody feels the raises and promotions they get are what they deserve; but chances are that, by the time you turn 30, you're making more than when you started. Your young-money budget probably didn't allow much to be left over for investing, and so you might have developed a lifestyle or mindset that doesn't include investing, or doesn't assign a high priority to investing.

Maybe the raises, bonuses, and promotions you received have been so subtle they never hit you over the head with the message that it's time to invest.

But it is.

We're back to that mindset: The future isn't the nebulous thing of your 20s, the thing that never will actually happen to you. Your future is becoming more concrete every day. It may not be in your face like your kids, your boss or your other pursuits, but it will be here … soon.

There's no need to panic; but if you haven't done so yet, now is the time for the mind shift that assigns the future the priority it demands. That may be hard to accept. But the good news is that it doesn't need to absorb a lot of your time at this point.

No matter what you do for a living now, investing will be your final career because retirement is little more than living from your investments (rather than your labor). Now is the time to make that shift in your mindset to phase out things like debt and phase in investing … not later. Later will be too late.

The more time you give your investments to grow, the less your retirement planning has to intrude on your day-to-day existence. Time is the biggest single factor determining the value of your investments by the time you retire. The earlier you begin, the more you will have when you retire. And chances are you are earning enough now to be able to carve out an amount to invest with every paycheck — even if it's a small amount you set aside in a CD to begin with. If you don't, you will have squandered the most important returns on your investments.

Therefore, even though your life is rushed and pressured now, it is important to carve out a Saturday afternoon at least once a year to see where your money is going and what it is doing for you.

Our 30s are the age when, after all the twists and turns of earlier times, we settle into the groove that will become the rest of our lives. Start maneuvering toward retirement by incorporating these strategies and you'll thank yourself when you make the turn into life's final lap.

In your 30s? How does retirement planning fit into your life? Are you on track or do you need to change something to reach your goals?

More about...Planning, Retirement

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lmoot
lmoot
4 years ago

“In your 30s? How does retirement planning fit into your life? Are you on track or do you need to change something to reach your goals? ” Some days I feel like I’m on track (in regards to my peers), but behind on my personal goals. I’m definitely not where I thought I would be financially in my 30’s (granted I’m only 31). Maybe I was delusional and maybe I still am because somehow I feel that I will make major headway between 35-39. I have been spending more money unfortunately, though not on frivolous things. I think being so… Read more »

Hammo
Hammo
4 years ago
Reply to  lmoot

I feel for you LMOOT, but as they say, you never stop learning, so don’t. I think we all suffer from a little ADHD as we search for the answers to our questions. And some ask those questions sooner than others. While you are still fit and healthy, try to find your passion and what motivates you. Then lean in that direction and the money will find you. Too often we choose the expected route rather than the one which fulfills us. If you can’t find your passion then look back to your childhood as we tend to rediscover it… Read more »

Ramona
Ramona
4 years ago

Right now we are looking for various retirement plans and opportunities, aside saving, developing our businesses etc. We have quite some time until then, but time passes fast anyway 🙂

JaM
JaM
4 years ago

Very Profound!Thanks William!!
“No matter what you do for a living now, investing will be your final career because retirement is little more than living from your investments (rather than your labor).”

freebird
freebird
4 years ago

I’m well past my 30s and found that retirement preparation is well worth the effort even when you don’t plan to or expect to retire. Many people (and I’m one) believe that a balanced life includes work, but this doesn’t mean that reaching financial independence to qualify for early retirement was a useless exercise in my case. What decoupling from your paycheck does is give you options that most around you don’t have. For some this means being able to pursue risky ventures like starting your own company to retain all the fruits of your talent and effort. For others… Read more »

Jason
Jason
4 years ago

I’m smack dab in the middle of my 30’s. After wasting the majority of my 20’s, living it up and not focused on savings… thank goodness I saw the light in my early 30’s. Around age 28, my wife and I had massive CC debt and it seemed like we were always struggling to make the house payment at the end of the month. Low and behold, we came up with a budget, curbed our spending, & started attacking our CC debt & student loans. It wasn’t easy, but we found ways to work extra jobs & trim expenses and… Read more »

Another Beth
Another Beth
4 years ago

I like this article! It really hits home. May I just make a suggestion? I think it helps immensely to spend some (like maybe 10% to 20%) of a bonus or raise on something fun. Treating yourself to something small can go a long way to sticking to your budget and retirement funds in the long term. When I worked in my last office job, I always set aside about 15% of my bonus for a great meal out and a few other splurges. I got the need to treat myself out of my system while also saving a big… Read more »

Kelli B
Kelli B
4 years ago

Good article! It is important to start thinking about saving for retirement as soon as possible. I usually recommend that individuals put some of their tax return in an IRA. I talk about other ways to boost your retirement savings in my new eBook: http://www.freebiefindingmom.com/secrets-of-a-successful-family-cfo/

Sanjeev
Sanjeev
4 years ago

Great Article William !!! I am 37 years old. After I turned 32, I got serious about my finance. Curbing lifestyle inflation is something people in 30s and all other group should focus on. Personally, if I get raise, half of the raise goes to saving and investing and rest half, my wife and I enjoy. That way I am doing both, enjoying present and saving for future. Getting out of Debt and staying out of Debt is a good principle I follow. “Making investing a habit” is a great one. Since, I have been investing for several years, it… Read more »

Glorified Plumber
Glorified Plumber
4 years ago

I love it! I especially love that much of the discussion on foundation here seems to be centered around laying the infrastructure around sound financial spending so that when you DO have the spare financial capacity it is easy to make the right decision. Make doing the right thing easier than doing the wrong thing. To use chemistry metaphors, lower the activation energy of all your financial reactions! For example, setting up the budget, complete with retirement planning as a line item. It might read 1% or $0 NOW, but, when you get that 2% raise it is REALLY easy… Read more »

Syed
Syed
4 years ago

Love the idea of maneuvering towards retirement. And you hit it on the head with the importance of automation. Making contributions month after month without even thinking about it will allow your account to grow quicker than you realize.

Andrew
Andrew
4 years ago

I know focusing on advancing my career would be best, but its just not where my heart is. I think I am nervous that if I take my eye of the prize, ‘early retirement’ and focus on my career, I will get stuck in a 9-5 trap. I guess it could speed things up, but I would rather focus my efforts on my side hustles and grow outside of my career. Everything else I seem to do well. With my B day right around the corner I will be 29 & try as I might I can’t seem to put… Read more »

Erin
Erin
4 years ago

I started getting smarter about money around age 30. I spend less and am down to one credit card. However, at 35, I’m still struggling to have much left over after paying student loans, my credit card, and having to get a new car when my last one died. I’m paying a small rent to live with family because rent in the Chicago area is so expensive. A one-bedroom apartment is nearly half my monthly net income. I do have a 401K at my job, but I feel like I’ll be at least 40 by the time I can live… Read more »

Ross Williams
Ross Williams
4 years ago

There are lots of things you “can” do in your 30’s to prepare for retriement, but not much that you actually should do. The suggestion that you “keep the mindset that supports retirement goals uppermost.” is a suggestion that retirement is life’s goal. Its not. In your 30’s, you have 30+ years to live before you retire. Its likely you will live less than 20 years after retiring. Money is likely to be the least of your worries those last 20 years before you die. Your health is likely to cause the major share of your concerns. I remember a… Read more »

lmoot
lmoot
4 years ago
Reply to  Ross Williams

Very well said. Whenever I hear that the best thing you can do is max out retirement savings from your 20’s onward I can hardly stop the massive eye roll coming on. That might be the best thing for 70 year old you (assuming you make it), but unless you make mad scrill, it would probably kind of suck for your 20’s, 30’s, 40’s, 50’s “you”. Especially since “maxing” out means putting over $20k per year aside. The “this is a recording” ad nauseum advice to take better care of future you…at literally all costs (since maxing out just a… Read more »

lmoot
lmoot
4 years ago
Reply to  lmoot

“working as *long* as possible”

getagrip
getagrip
4 years ago
Reply to  Ross Williams

“keep the mindset that supports retirement goals uppermost.” This line also bothered me as well. In your 30’s you will, as you will at many stages of your life, have differing priorities. You should be able to make a basic decision about your life with respect to financial independence, create a plan, and work towards that plan, but that plan needs to include enjoyment of life now, whether that includes inexpensive time with family, trips to Europe, pursuing passions, supporting your kids dreams, whatever. So I guess what I’m saying is what should be uppermost in your mind is supporting… Read more »

Ely
Ely
4 years ago
Reply to  Ross Williams

I get what you’re trying to say, but you’re wrong. More and more of us have to consider the possibility of living 30+ years after ‘retirement.’ Sure we all hope to keep working, but life intervenes. What if you get laid off at 60 and no one is hiring? What if you have health problems that force you to stop? You say that health is a bigger concern than money in the last 20 years, but you know what you need if your health is poor? Money for doctors, money for prescriptions, money to pay your living expenses when you… Read more »

Marie
Marie
4 years ago

I’m starting to think leasing might be the way to go for me. Not to upgrade to a fancier car, but because a steady monthly payment coupled with prompt attention to problems is a lot easier to manage than unforeseen blowouts. Even with an emergency fund, it’s a hassle dealing every few months with a several-hundred-dollar problem, and being unexpectedly without a car causes so much stress and running around to get to work. Knowing a problem will be taken care of promptly when I drop off the car and pick up a loaner is peace of mind that I… Read more »

Mela
Mela
4 years ago

I agree with all your points. As someone entering their 30s next year, this is exactly how I’d like to approach my upcoming years.

You are so right when you say investing is a habit. I am working on doing so as consistently as possible.

I also liked the point about curbing lifestyle inflation. Too many people get the big raise and then increase their expenses only to believe the answer once again is more money instead of simply cutting costs.

Melissa
Melissa
4 years ago

I’ve just turned 29 and decided to get on the Retirement saving bandwagon. I always thought I would be further along then I am now, but I am making headway. Two years ago I left a job as a cashier for a much better consistent 40 hours a week position. I make around 24,000 a year, single, no children. I work for a small business with no benefits like 401K. Most of what I make goes to bills and groceries. I do work a second, part time job with about 5-6 hours every other week. How do you recommend I… Read more »

bryan
bryan
4 years ago
Reply to  Melissa

First you need to have a 3-6 month emergency fund, and then start contributing whatever you can to an IRA through Vanguard. You need $1,000 to open a target fund IRA. This is a well diversified low cost fund that you can keep adding to in $100 increments.

Ross Williams
Ross Williams
4 years ago

No one has much chance of living to 100. For people retiring at 65, 30 most years is very optimistic. Most will die in less than 20 years.

At 30 you have a lot more immediate things to “worry” about than how you will feed yourself when you are 90, or how you will pay your medical bills. You have a lot of time to prepare for those things.

Bryan @ Just One More Year
Bryan @ Just One More Year
4 years ago

This is some great advice!. For us, we passed the 30’s a decade ago.

Our focus is to wind down working for an employer and move on to the next phase of life. We still keep many of these same techniques you describe in place. Practicing good financial habits and automating everything we could got us to our end goal much early!

Hammo
Hammo
4 years ago

Thanks William. It’s a timely reminder.

Although, I don’t ever think I’ll really retire, it’s just a question if the money is still flowing later in life.

Financially I’ve had a few set backs but I’m back on track now and I’ve even got the kids saving, which hopefully means they’ll start creating habits themselves.

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