3 Ways To Get Smart About Retirement In Your 30s

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Your 30s is the perfect time to chart out and start to plan for your retirement even though your official retirement plan may be a ways off. Planning for your retirement is about creating a comprehensive plan that will allow you access to multiple income streams when you hit retirement age.

#1 Open Up that 401(k)

In your 30s, you are more than likely finally working a jog that offers you a 401(k). Your idea goal should be able to save the maximum you can each year into your 401(k). However, even saving a little bit will help. If your company offers a match starting at a contribution of a certain percent of your salary, start there. For example, if your company will match your contributions starting at 3%, start your contribution at 3%. Every six months or so, increase your contributions half a percentage point until you are maxing out your 401(k) each year. Maxing this out for the next 30 years will really help you build a nice nest egg.

When you change jobs, which you will likely do multiple times over the course of your career, you can roll your 401(k) into an IRA account or roll it over into a new 401(k) plan. Don't cash out though; the penalties are high and you lose out on the potential interest you would have earned.

#2 Create an IRA

Individual retirement plans, or IRAs, are retirement plans that you create outside of your workplace. With an IRA, you are contributing money after-taxes, and the contribution limit each year is much smaller than a 401(k). However, that doesn't make an IRA any less important. When it comes to retirement, you can withdraw from your IRA without paying taxes as you paid taxes on the money when you put it into your IRA. An IRA can create a nice supplement income stream in addition to your 401(k).

#3 Invest Outside of Your Retirement

Don't tie up all of your investments in your retirement accounts. You can't touch your income from your retirement accounts until your 60s without incurring penalties. Maybe you want or need to retire earlier; that is where outside investments come in. You should be investing in the stock market in order to build up your assets. That way, if you need money, you can pull it out of your stick investments long before you hit retirement age.

#4 Build up Your Cash Fund

Finally, in your 30s you should have a nice sized emergency fund. Ideally, your emergency fund should be able to support your life if you were unemployed for at least six months. If your emergency fund is not that big right now, don't worry. Just continue to contribute to it over time. Ideally, by the end of your 30s, you will have a nice size cash fund that you can put into a high-interest savings account.

In your 30s, your goal should be to max out your 401(k) and IRA contributions each year, while building an independent stock portfolio and emergency fund. Engaging in these behaviors now will give you decades to start earning interest on your efforts. For more information, contact your local retirement planning advisors

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