Investing for retirement in your 30s doesn’t mean you’re too late. There’s still plenty of time to build a cushy retirement.
In this article, Freedom Debt Relief reviews several tips to ensure you hit the mark with your retirement.
Fill Up Your 401(k)
You might be one of many in their 30s who have a debt hangover from their 20s. This can be a drag on your ability to fund your 401(k). Paying down debt will free up money to contribution even more to your 401(k).
Freedom Debt Relief reviews says to try contributing the maximum to your 401(k). This means $18,000 per year. While more would be better, this is all the government allows. At the least, you’ll be doing the best possible and far better than most of your coworkers.
Your contributions will be on auto pilot, coming out with each paycheck. Consider raising your contribution with each pay raise, which is about once per year.
Maxing out your 401(k) also means you should be getting the full benefit of any employer match. Even if you can’t contribute the maximum to your 401(k), try to at least take full advantage of your employer’s match.
Add A Roth IRA To The Mix
If you are already maxing out your 401(k), Roth IRAs are another great place to contribute to retirement. They allow you to contribute $5,500 per year, assuming you meet eligibility requirements.
Unlike a 401(k), Roth IRA contributions go in after-tax. That means you will contributing to your Roth IRA after you are paid. You’ll also need to setup your Roth IRA contributions so they pull from your bank account automatically.
Money in your Roth IRA grows tax deferred. When you pull it out during retirement, unlike a 401(k), your withdrawals will be tax free.
Aim For Growth
In your 30s, retirement is over 30 years off. Freedom Debt Relief reviews notes that you should focus on growth funds. While these types of funds have higher risk and can create more volatility in your portfolio, it shouldn’t affect your long-term time frame. You can expect volatility in the short-term but by the time your ready to retire, the end result should be better growth than if you chose less aggressive funds.
Of course, as you get closer to retirement, your portfolio mix will change. The old rule use to be that you subtract your age from 100 to determine the percentage of stocks in your portfolio. The remaining percentage then goes into bonds. Now it is more common to use 110.
For example, if you are 35, subtract it from 110. The result is 75. That means 75% of your portfolio should be in stocks and 35% in bonds. Using the allocation above, that 75% will go specifically toward growth stocks.
Freedom Debt Relief reviews can help you get your debt under control. If you’d like a free evaluation from a certified debt consultant, contact them at freedomdebtrelief.com