Your 30s aren’t just a chapter of growth, they’re a launching pad. You might be building your career, earning more than ever before, or beginning to manage generational wealth. Maybe you’re on the path to business ownership or professional partnership, or you’ve just started thinking about what your legacy could look like.
Wherever you are, one thing is certain: now is the time to get serious about retirement planning.
Retirement planning isn’t relegated to only those nearing retirement. The truth is, your 30s may be the most pivotal decade for building lasting wealth and ensuring it’s there when you need it later. With the power of compounding, early decisions can translate into far greater freedom in the future.
Here’s how to plan for retirement in your 30s, and why the effort you put in today will be well worth it tomorrow.
The Real Cost of Waiting
High-income earners and individuals with inherited wealth may feel ahead of the game, assuming their future is secure. But, income or inheritance alone doesn’t guarantee retirement readiness. In fact, lifestyle creep, tax obligations, and unplanned expenses can quietly erode wealth over time.
Starting early allows you to get in front of these risks, maximizing growth potential.
The Power of Compounding: Time is Your Greatest Asset
If there’s one financial concept to carry with you, it’s this: compound growth rewards those who start early.
Let’s say you invest $5,000 annually starting at age 30 with a 7% annual rate. By age 65, you could have nearly $800,000 saved. Wait until 40 to start? That number drops to under $400,000, even if you contribute the same amount.
It’s not about saving everything now, but about building a rhythm and letting time do the heavy lifting.
Prioritize your Retirement Vehicles
Your 30s are an ideal time to diversify your savings strategy. You likely have several retirement savings options, including employer-sponsored retirement plans like a 401(k) or individual accounts like a Roth IRA. Each of these options offers its own set of benefits, tax advantages, and opportunities for investment.
A 401(k) is often a great starting point, especially if your employer offers a matching contribution. Aim to contribute enough to take full advantage of this match, as it’s essentially free money toward your future.
A Roth IRA offers tax-free growth and withdrawals, which is especially beneficial if you expect to be in a higher tax bracket in retirement. For individuals planning to inherit wealth, a Roth IRA can also provide a strategic way to grow and protect wealth while mitigating future tax impacts.
Small Increases, Big Payoffs
When it comes to 401(k)s and Roth IRAs, small incremental increases in your contribution can have a major impact over time. Increasing your annual contribution by just 1% each year can add up significantly. If you start saving 10% of your income and gradually increase that by 1% each year, you’ll build momentum over time without making major lifestyle sacrifices.
This approach is especially effective for high earners whose income is continuing to rise.
Aligning your savings rate with your earning power is key to staying ahead of future needs.
Keep Your Finances in Order
Building a sustainable retirement savings plan isn’t just about contributing to accounts—it's also about managing your current expenses and debt. Consider these money management strategies to enhance your financial wellness.
- Budget with intention: A well-structured budget can help you save more by identifying areas where you can reduce discretionary spending.
- Avoid high-interest debt: Credit card balances and lifestyle loans can erode your progress.
- Automate everything: Set up recurring contributions to your retirement accounts so savings happens without a second thought. Automation helps you stay disciplined and makes it easier to adjust your savings over time.
Read more about how to feel confident and secure in your financial situation by reading our blog “What is Financial Wellness – and Why Does it Matter?”
Don’t Forget the What Ifs
While saving for retirement is essential, it’s equally important to prepare for the unexpected. A healthy money management plan includes an:
- Emergency fund: Aim to set aside 3-6 months of living expenses so surprises don’t derail your progress.
- Insurance planning: Health and life insurance can protect your assets from being tapped for unexpected costs. Some policies can even play a role in your long-term financial strategy. Disability insurance provides income protection if an illness or injury prevents you from working, helping you stay on track with long-term savings goals.
Are You on Track?
As you move through your 30s, it’s helpful to have clear savings benchmarks to gauge whether you’re on track for a secure retirement. Here’s a general guideline:
- By age 30: You should aim to have saved at least one year’s salary in retirement accounts.
- By age 35: You should aim to have saved about 2-3 times your annual income.
- By age 40: You should aim to have saved about 3-4 times your annual income.
These benchmarks can vary based on lifestyle, goals, and planned retirement age, but they offer a helpful lens for assessing progress.
Understanding your full financial picture is a crucial part of planning for the future. Read more in our recent blog The First Step in the Financial Planning Process.
Partner with a Trusted Advisor
Your 30s are full of potential, and complexity. Balancing career growth, family, investments, and long-term goals require more than just good intentions. It calls for strategic, comprehensive planning.
At Hancock Whitney, we understand the unique challenges that high net-worth individuals face in planning for retirement. Our wealth management team provides personalized financial planning, retirement planning, and investment advice that takes your career, assets, and life goals into consideration. Whether you’re planning for the future, managing your wealth, or preparing for an inheritance, our financial experts are here to help you navigate your journey toward a secure retirement. You can learn more on our approach to helping clients with Financial & Retirement Planning.
Contact an advisor today to begin your financial planning journey with confidence.
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