If your retirement savings in your 30s were a Britney Spears song (just go with us on this one), it would be “I’m Not a Girl, Not Yet a Woman.” Maybe you’ve paid off your student loans, but you’re still renting while you daydream about homeownership and save for a down payment. Or you’re spending hundreds a week on childcare but haven’t gotten around to opening an account for college savings just yet. While your salary may have seen a bump since you were in your 20s, there are likely even more expensive things vying for a piece of your paycheck—so it’s easy for 30-somethings to neglect their retirement savings.
To help keep our readers from doing just that, we asked experts how to save for retirement—even when you feel like it’s on the bottom of your priority list.
Don’t opt for one-size-fits-all savings.
While saving, in general, is important, there are definitely not-so-smart ways to save. (Letting all of your money languish in a low-interest checking account comes to mind.) To get the most from your savings, decide where to allocate your savings based on how soon you’ll need access to it. “While there are some exceptions, the money you contribute to retirement savings vehicles is largely inaccessible before age 59 and a half, so you can’t withdraw those funds without incurring a penalty,” says financial expert Stefanie O’Connell-Rodriguez, author of The Broke and Beautiful Life and founder of Statement. That means tapping into your 401(k) for a real estate down payment or to pay for your kids’ education is almost always a bad move. “It’s important to consider all the goals you have between now and retirement, and what money you’ll need to fund them,” she says. For shorter-term goals—around five years or less—“you’re probably better served keeping your money accessible in a vehicle like a high-yield savings account where it won’t be subject to the short-term ups and downs of the market,” she advises. For goals that are more than five years out, but well before retirement, you may consider investing in some nonretirement accounts, she says, so that you can hopefully grow your money without it being inaccessible.
Keep your accounts separate—but keep tabs on them together.
Ideally, each specific life goal will have its own account. “For example, your retirement goals are in your 401(k) and IRA accounts. Kids’ college savings are in a 529 account,” says Paco De Leon, author of Finance for the People: Getting a Grip on Your Finances. “Your emergency fund is in a high-yield money market savings account. And you’re saving for a down payment in a brokerage account. Different accounts will help you easily see your progress and help you navigate how to realistically make a plan to achieve your financial goals.” Of course, every time you add an account, you’re upping the chance that something, somewhere, will get overlooked. With that in mind, consider using a platform or app that will pull the latest info on all of your accounts into one place, like NerdWallet.
Resist lifestyle inflation.
As raises and bonuses come your way, it can be tempting to throw your more grown-up salary at a lifestyle that feels equally mature. (So long, hand-me-down furniture and store-brand cereal!) But you’d be wise to take a beat before you upgrade: “If you want to do bigger things with your money, set a goal every time you get a raise or refund,” says Bola Sokunbi, author of the Clever Girl Finance books. For instance, if you get a $500-a-month raise, she recommends putting $250 to $300 of it in savings. “I’m not telling you that you can’t go out and buy expensive coffee,” she says. “But I am saying to build up savings before you go out for the coffee.” One of the many, many things that the pandemic taught us, she says, is “that we spend a lot of money on stuff we don’t need to. Can you make coffee at home? Can you workout at home without a monthly gym membership? How much do you want your goals, and what monthly expenses will you give up for them?”
Right-size your risk.
“The time frame for when you need the money should determine the amount of risk you take with those funds,” says De Leon. “In your 30s, retirement is most likely still a ways away, so you still have time to keep your investment in positions that are aggressive.” That means your definition of how to save for retirement will evolve as you get older: The closer you get to retirement, the more conservative your investments should be.
