Is 30 Years Old Too Late to Start Saving for Retirement?

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Age 30 is not too late to start saving for retirement. Read on to learn how to best catch up on your retirement savings. [[{“value”:”

When you get your first job, saving for retirement is probably the last thing on your mind. And if you’re nearing 30 and you haven’t started yet, it can be easy to panic. After all, some of the most common financial advice around retirement is that the earlier you can start, the better. And while it is true because of compound interest, that doesn’t mean you’ve completely missed the opportunity to start.

Here’s what you should know if you’re late to the retirement-saving party.

30 is not too late to start saving for retirement

It’s easier to build your retirement savings by starting early, but that doesn’t mean you should give up if you’re starting to save later in life. Really, there is only one thing that is certain here: If you never start, you won’t have anything to fall back on when you reach retirement age. And though it may feel impossible, you still have a chance to meet your retirement goals.

Let’s say you’re 30 years old, earn $75,000 a year, and you start putting 5% of your income into a 401(k), which your employer matches. That means you’d be putting away $7,500 per year for retirement. Assuming a 7% annual return, you’d have about $1.47 million once you turn 65.

That’s no small feat. And it’s worth calling out that this wouldn’t even require you to max out your 401(k) every year, which is capped at $23,000 per year as of 2024.

Depending on your retirement goals, this may or may not be enough to retire on. Using a retirement calculator is a good way to understand how much you need to retire so you can plan around your needs.

Tips to increase your retirement savings

If you’re starting to save for retirement in your 30s, there are steps you can take to boost the value of your retirement savings. For example, if your employer offers a 401(k) match, it’s usually best to contribute enough to that account to at least capture that match. Otherwise, you’d be leaving money on the table.

Additionally, you’re likely eligible to contribute to both a 401(k) and an IRA. If so, opening an IRA alongside your 401(k) can increase your total annual retirement contributions by $7,000, as of 2024. (Based on the prior example, that could almost double your annual contributions, if it’s in your budget.)

You can also automate those contributions to make this tactic that much easier. Just make sure you’re investing those funds (which isn’t automatic) rather than simply stashing them in the account. There are also a few opportunities to increase your retirement contributions that you may want to consider, assuming you aren’t maxing those out each year.

For instance, you could contribute bonuses or tax refunds to an IRA instead of holding onto that cash. And, if possible, you could opt to increase your retirement contributions by a small percentage per year (for example, an additional 1% of your annual salary), especially if you’re getting annual raises. You would simply need to talk to your 401(k) provider to adjust your contribution level.

Another thing to consider is using a Roth IRA rather than a traditional IRA. This wouldn’t reduce your taxable income now like contributing to a traditional IRA would. But you would be able to take out that cash in retirement tax-free. That can be a useful tactic to ensure that the money you have for retirement goes further.

Just get started

It can be easy to feel as if you’ve fallen too far behind to catch up on your retirement savings. But the sooner you can start, the better. And if you’re willing to do the math and use the retirement tools available to you, you can get back on track.

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