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How to plan & save for retirement in your 30s

Young woman relaxing while working in the living room at home
Moyo Studio/Getty Images

It’s never too early to start dreaming big for your retirement, and it’s never too late to start saving to make your dreams a reality. Whether you want to spend more time with family, travel the world, volunteer more time to charities and causes you care about or all of the above, you can set yourself up for success by establishing financial habits now that will help build the retirement you want.

You’re already thinking about your retirement, so you’re on the right track. You’re right on time, too. The Retirement Readiness survey by Thrivent1 found that 73% of working adults started thinking seriously about retirement in their 30s.

73% of working adults started thinking seriously about retirement in their 30s.
Thrivent Retirement Readiness Survey

Now that you’re in your 30s, you’ve probably got several years of work behind you, and increased earning potential ahead. That’s why now is the ideal time to get started with smart savings practices you can use for the next several decades. Saving now gives your assets more time to grow into the financial foundation you need for a comfortable, fulfilling post-career life.

Here’s what you can do to start or accelerate your savings efforts to create the retirement of your dreams.

How much should you have saved for retirement by your 30s?

A good rule of thumb for 30-somethings expecting to retire around age 65 is to have the equivalent of one year’s salary in savings by age 30. By the time you reach 40, that amount increases to three years’ worth of your annual pay. That means that if you earn $50,000 a year, you should have $150,000 in retirement savings by the time you’re 40.

One year's salary by  the time you reach 30. By the time you reach 40, you should have 3 times your annual salary saved.

This rule of thumb might not feel realistic, especially when you’re at an age when you have a lot of financial obligations. But you can think of it as a broad target for goal setting. Right now, doing the best you can with what you have is enough. Every dollar you put away goes a long way toward building the retirement you envision.

If it’s hard to imagine what your life in retirement will look like, now is a good time to dream a bit. Maybe you’ll want to buy a second home to be closer to family, or donate more to your church, community, or favorite non-profit. If so, you might need a larger nest egg.

On the other hand, you may want to downsize to a smaller house or retire to a state with a lower cost of living. In that case, you could base your retirement strategy on a less expensive lifestyle.

The Thrivent retirement income planning calculator can help ensure you have the right amount of savings for the retirement you want. Simply enter some personal information like your age, current savings, and contribution rate, and the calculator will show if you're on track to meet your retirement savings goals.

How to save for retirement in your 30s

Every dollar you’re able to invest in your 30s is going to be worth more in retirement than a dollar you contribute later in life. Why? Because you'll benefit from compounding returns.

Let's say you invest $500 per month starting at age 30, and your money grows at an average rate of 8% each year. By the time you turn 65, you would have $1,033,900.82 (pre-tax). But imagine that you contribute the same amount starting at 40 or 50. The amount would be much lower.

The power of compound interest. Starting as early as possible helps your ending value greatly over time.

When you’re in your 30s, time is on your side. The more money you’re able to set aside for your future self, the better off you’re bound to be down the road. Choosing investments now that could provide solid returns for years to come can help you achieve the post-career life you envision.

Here are some investment options to consider:

401(k)s & 403(b)s

  • 2023 contribution limit: $22,500
  • 2024 contribution limit: $23,000

Workplace-sponsored plans like 401(k)s—and 403(b)s, for some nonprofit employees—are usually a great place to start. The money you contribute to the plan is pre-tax, and your contributions and earnings accumulate tax-free until you make withdrawals after age 59½.2 At that point, any funds you pull from the plan are taxed at your ordinary rate—much like your earnings are taxed today.

Many employers will match a portion of your contributions, further boosting your earnings potential. It's always a good idea to contribute at least enough to maximize your employer match. If you don’t meet the employee match, you’re leaving what could be considered free money on the table. As you move forward in your career—and ideally as your salary increases—set a goal to bump up your savings rate by a percentage or two each year to build your nest egg even more.

Roth 401(k)s & 403(b)s

  • 2023 contribution limit: $22,500
  • 2024 contribution limit: $23,000

If your employer offers it, a Roth version of the 401(k) or the 403(b) could be even more advantageous. While your contributions to the plan are made with after-tax dollars, you're not taxed when you make eligible withdrawals in retirement.3 As a 30-something, your earnings peak is still probably ahead of you, so you may be better off paying those taxes now when you are in a lower tax bracket.

Unlike traditional versions of these accounts, starting in 2024 there will not be a required minimum distribution (RMD) requirement at a specific age. The money can continue to grow tax-free in the account as long as you'd like it to.

Traditional IRAs & Roth IRAs

  • 2023 contribution limit: $6,500
  • 2024 contribution limit: $7,000

Perhaps you don’t have access to an employer-sponsored retirement savings plan and need to find your own savings plan. Or maybe you already have a 401(k) or 403(b) through your employer, but you want to find additional opportunities to build your savings even more.

Consider an individual retirement account (IRA). An IRA is an investment account that you open and fund yourself, unlike 401(k)s and 403(b)s, which you can typically only access through an employer. IRAs tend to offer a wide range of investment choices than employer-sponsored plans. You can choose a traditional or Roth IRA (or both). The main differences between them are how each is taxed and how you make withdrawals.

  • Traditional IRAs work in a similar way to plans like traditional 401(k)s—you contribute pre-tax dollars that are taxed when you withdraw the money in retirement. Instead of your money being taxed at your current rate, your withdrawals—which will be considered income—will be taxed at the bracket you’re in when you take them. If you choose a traditional IRA and you or your spouse are covered by an employer-sponsored retirement plan, MAGI limits may affect your ability to deduct contributions.3
  • Roth IRAs are funded by dollars that you've already paid taxes on. This makes this option ideal for those looking for tax-efficiency in retirement since you can make qualified withdrawals tax-free.4 Unlike traditional IRAs, Roth IRAs have income limits to participate.5

Don’t feel bad if you haven’t heard of these retirement savings options. According to the Retirement Readiness survey, only 45% of adults said they were moderately or extremely knowledgeable about these types of accounts.

Investing in your 30s

Whichever type of retirement account you use, ensuring your savings are protected from market volatility is vital. Market fluctuations during 2022 made investors pessimistic, and rising inflation hasn’t helped.

What’s your comfort level with market volatility? How much of an investment loss can you accept? One of the best ways to find out is by determining your risk tolerance. Knowing this can help you decide which investments will be most effective for your situation and goals.

In your 30s, you might be willing to take on more risk because you have more time to learn from your investment decisions and your money has more time to balance out from market fluctuations.

Your risk tolerance will change as you get older, and so will you perspective and priorities. As you get closer to retirement age, you may want to consider going with safer investments. Keep in mind that risk s always a factor with financial investments. But investing with an end goal in mind can help keep you on track.

Use the “pay yourself first” method to make saving easier

The “pay yourself first” strategy involves immediately allocating a portion of each paycheck to your retirement savings accounts.

Here are four ways to get in the habit of paying yourself first:

Hand holding a phone with a dollar sign on the screen
Automate saving for retirement
Checklist with calculator
Create a budget
Illustration of person thinking of money
Plan for the what-ifs
Heart with dollar sign
Use financial windfalls wisely

1. Automate contributions to your retirement accounts.

Automating your investment contributions helps you avoid the temptation to spend that money because you don’t see those funds – it's almost like they don’t exist.

The easiest way to do this is through a payroll deduction to your 401(k) or by setting up electronic deposits into an IRA or other account. You’ll need to figure out what you can realistically and consistently contribute to your retirement savings each month while keeping on top of your living and day-to-day expenses.

You may want to save as much as possible as often as possible, but you need to budget for your other financial obligations.

2. Create a budget to find more ways to save.

Speaking of budgets, starting and sticking to a monthly budget is an effective way to consistently build your retirement savings and cover your day-to-day expenses. You can start by reviewing your spending habits or using an app that automatically tracks where your money is going. Having visibility into your spending behavior allows you to see where your money needs to go and where you can cut costs.

Sticking to a budget doesn’t have to mean slashing all discretionary, nonessential spending. You’re more likely to stay on a budget if you make room for meaningful things for you and your family. Dining out, shopping at the mall, after-school activities for your kids or monthly donations to your church and charities are important expenses to budget for. Make sure to include them in your financial planning so you’re less likely to quit because it’s all work and no play.

Just be careful to avoid “lifestyle creep,” where your discretionary expenses keep rising with your income.

3. Plan for the “what-ifs.”

What would happen if you were suddenly faced with an emergency $500 plumbing or auto repair bill? If you’re like 60% of respondents to Thrivent’s Financial Consumer Outlook Survey6, that unexpected expense would be cause for concern.

That’s why having an emergency fund that can cover at least three months’ worth of expenses is important. And starting in 2024, the Secure Act 2.0 will allow employers to attach emergency savings accounts (separate from retirement savings) with employee contributions of up to $2,500. Employers can auto-enroll employees and place up to 3% of their pay into them.

If you have dependents, consider buying disability insurance and life insurance that can help protect them in a worst-case scenario.

If unforeseen costs knock you off track and you fall short on your retirement savings contributions, don’t worry. Any contributions you can reasonably afford will make a positive impact on your long-term outlook, no matter how small they are. Unexpected expenses can be difficult to deal with, but they’re usually temporary, and you’ll have time to make up your retirement savings contributions down the road.

4. Use financial windfalls wisely.

Be sure to put any cash windfalls you receive to good use. If you get a tax refund or a nice bonus check at the end of the year, it’s only natural to want to splurge on something fun. But you can use a portion of those funds to give your retirement account a one-time boost or add to your emergency fund. You’ll probably find that it’s easier to invest dollars that you weren’t accounting for in your budget anyway.

Making your retirement vision a reality

Building a solid financial foundation in your 30s is not only one the best things you can do for yourself; it’s one of the best things you can do for your family. Your children will know you’re taken care of in your later years and you’ll be confident that you can make your retirement goals a reality.

Consider working with a professional who understands your goals and values. A Thrivent financial advisor can help you create a customized financial strategy that will put you on the path toward a rewarding future.

1Methodology: This research was conducted in June 2022 among a national sample of 1,500 adults in order to measure their sentiments, financial planning, knowledge, and issues regarding retirement. The interviews were conducted online and the data was broken into three sample groups; Saving, Nearing, and Retired. Results from the full survey have a margin of error of plus or minus 3 percentage points.

2Withdrawals made prior to the age of 59½ may be subject to a 10 percent federal tax penalty. Termination of service at age 55 or older will not be subject to the 10% penalty from your employer's qualified plan.

3 For 2023, your contribution deduction is reduced if MAGI is between $73,000 and $83,000 on a single return and $116,000 and $136,000 on a joint return. If you're married filing jointly and an active participant in an employer sponsored retirement plan and your spouse is not, the deduction for your spouse's contribution is phased out if MAGI is between $218,000 and $228,000. For 2024, your contribution deduction is reduced if MAGI is between $77,000 and $87,000 on a single return and $123,000 and $143,000 on a joint return. If you're married filing jointly and an active participant in an employer sponsored retirement plan and your spouse is not, the deduction for your spouse's contribution is phased out if MAGI is between $230,000 and $240,000. If you're a married taxpayer who files separately, consult your tax advisor.

4 Distributions of earnings are tax free as long as your first Roth IRA or Roth 401(k) contribution or conversion at least five years prior and one of the following requirements is met: (1) you are at least age 59½; (2) you are disabled; (3) you are purchasing your first home ($10,000 lifetime maximum); or (4) the money is being paid to a beneficiary.

5 2023: You may contribute to a Roth IRA if your modified adjusted gross income for 2023 is less than $138,000 (single filer) or less than $218,000 (joint filer). Contribution reduced if MAGI is between $138,000 and $153,000 on a 2023 single return and $218,000 and $228,000 on a 2023 joint return. 2024: You may contribute to a Roth IRA if your modified adjusted gross income for 2024 is less than $146,000 (single filer) or less than $230,000 (joint filer). Contribution reduced if MAGI is between $146,000 and $161,000 on a 2024 single return and $230,000 and $240,000 on a 2023 joint return. If you are a married taxpayer who files separately, consult your tax professional.

5 Methodology: This general population research was conducted in partnership with data intelligence company Morning Consult and polled 2,221 adults across the country between May 9 and 17, 2022. The interviews were conducted online, and the data were weighted to approximate a target sample of nationally representative adults based on age, gender, ethnicity, income, geography. Results from the full survey have a margin of error of +/- 2 percentage points.

If requested, a licensed insurance agent/producer may contact you and financial solutions, including insurance may be solicited.

Thrivent and its financial advisors and professionals do not provide legal, accounting or tax advice. Consult your attorney or tax professional.