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Considerations In Your 30s

Build your foundation

Strengthen your retirement assets and earning power

Starting and supporting a family, purchasing a home, and paying off debt are common expenses that arise during your 30s. Even with these savings priorities, it’s important to continue building a foundation today for the kind of life you want in retirement.

Prioritize saving for retirement:

  • If you haven’t yet begun to save, enroll in your employer’s retirement plan today
  • Make sure you’re saving as much as possible
  • Consider giving yourself a “raise” by increasing your retirement contribution each time you get a raise at work
  • In addition to your employer’s retirement plan, consider contributing to an IRA

Think of saving for retirement as paying your future self. Ask yourself:
  1. How much should I be saving?
  2. Am I putting my retirement investments in the right place?
1. Determining how much to save
The amount that you contribute to your retirement savings is one of the most important aspects of retirement planning, and is the biggest factor in determining how much savings you will have when you retire. Consider the following three options for determining how much you may need to save each year.

  • Option 1: Use a 10% rule of thumb
    As a general guideline, contribute at least 10% of your income annually to your retirement plan in order to have enough income during retirement.
    • Check to see if your company offers a match, and make sure you contribute at least as much as the match amount. This is free money you don’t want to pass up!
  • Option 2: See if you’re on track for retirement
    Many personal factors may affect the amount you should save for retirement. Use an online calculator to take into account your unique information and receive personalized results.
    • Our fast and easy-to-use Retirement Quick View Calculator will help determine if you are on track to meet your goals, or if you need to increase the amount you’re saving. After answering a few quick questions, you will have the opportunity to create some “what-if” scenarios — for example, what if you increased your savings rate, increased your expected rate of return, or planned to retire a few years later?
    • You’ll see that a little more in savings today can have a big impact 30 years from now.
  • Option 3: Work with a financial advisor
    Talking with a financial advisor to develop your retirement savings plan is another way to make sure you’re on track. While more involved, the results can be much more robust and specific to your situation.

2. Putting your retirement investments in the right place
In your 20s, you may not have put much thought into the amount of risk you are willing to take with your savings. Now, as you develop a better idea of your needs and expectations, take the time to make sure your investment strategy aligns with your tolerance for risk and your retirement timeline. As your savings grow, it’s important to review and understand your asset allocation.

Your asset allocation is how you distribute your savings among the different types of investments (stock funds, bond funds, and stable value or money market investments):
  • Your asset mix is a major determinant of your portfolio returns and the variability (risk) of those returns.
  • For instance, a portfolio that holds 80% bonds and 20% stocks will provide a return and risk pattern that is typically very different from that of a portfolio holding 15% bonds and 85% stocks.
  • Maintaining an appropriate asset allocation is critical to aligning your investment strategy with your overall investment objectives.
When you invest in your 30s, you may be able to afford to invest a significant percentage of your portfolio in stock funds, which are generally considered to have more risk but also larger potential for gains. Here are a few things to consider when deciding to invest in stock funds:
  • They usually offer the greatest opportunity for long-term gains, and with 30 or more years before retirement, you may recover from short-term losses.
  • Many people make the mistake of being too conservative with their portfolio even when they won’t need the money for 30 or 40 years.
For more retirement planning tips and ideas, see our retirement checklist for your 30s.
Recordkeeping, trustee and/or custody services are provided by Wells Fargo Institutional Retirement and Trust, a business unit of Wells Fargo Bank, N.A. This information is for educational purposes only and does not constitute investment, financial, tax or legal advice. Please contact your investment, financial, tax or legal advisor regarding your specific needs and situation.