5 Tips for Retirement Planning in Your 30s
Do you want to retire comfortably? Take care of your future by setting up a solid foundation in your 30’s today. This gives you enough time to prepare for the expected and create room for the unexpected. Below are the best tips to get you started.
1. Save now.
It is tempting to have an ‘I will save later attitude’ in your 30s but setting money aside for the future is the best thing you can do now. Start to understand your cashflow and optimize it to build an emergency fund and save for retirement. One of the simplest things you can do is to write a monthly budget. It is incredibly easy now if you use budgeting software and apps.
2. Think for the long-term.
Do not just settle for trades. Look at investment for the long-term. According to studies, timing your investments is not as profitable as holding them for a long period of time. Make sure you look at individual stocks, mutual funds, and other assets that you can buy and hold for the long-term. You can still be aggressive in your investments. Focus on growth stocks with long-term competitive advantages over their peers.
3. Use tax-advantages tools.
In your 30’s, take the time to pick retirement tools that will offer you tax advantages for the future. For example, you can take an IRA or 401(k) that allows you to invest pre-tax money into an account where your taxable gains will be deferred until you begin taking withdrawals in retirement. Another great investment is a Roth IRA, which allows your investment gains to grow completely tax-free for life, assuming you make no unqualified withdrawals. This means no upfront tax deductions and bigger tax breaks when you retire.
4. Find good health insurance.
An unexpected medical expense can damage your finances severely. Buy health insurance and make sure it fits your individual needs. Do not just get the cheapest one you can find. Look at features. Examine the plan you have every year and adjust as necessary.
5. Be mindful of your debt.
Never underestimate your debt. Always be smart about it regardless of your age. The last thing you want is to be hindered by debt. Carrying around large amounts of debt can reduce your ability to save during your working years. It can also eat up your retirement benefits during your golden years when you no longer have wage income. Always work with a budget to keep your debt under control. Use cash if you have to. The most important thing to do is to limit your debt and focus on building wealth that will allow you to retire comfortably in the future.