Are you in your 30’s and not thinking of your retirement? If you are you are not alone in this as most people in their 30’s do not think of their retirement at all. Or if they do it is in minimal ways. Well if you want to have the best retirement possible it is vital you do think of and to a degree plan for your retirement in your 30’s if not sooner.
At a minimum, you need to be saving at least 10% of your gross income for retirement. But if you are starting later in your career in your 30’s you need to consider saving 15% of your gross income. If that is not achievable then perhaps consider saving 15% of your net income after taxes. For people who are just starting out or do not have a sufficient emergency fund you may want to consider saving 10% towards retirement and the other 5% towards an emergency fund. Both are vital to your financial future and eventual retirement.
The next thing is to guard against lifestyle inflation. This can be done by saving all of your raises and bonuses before they hit your bank account. By doing this, you will live on what you did before and not even notice that you were given a bump in pay. Setting this up on automatic withdrawals is the best way to achieve this goal and minimize the impact on your living.
Then you need to start to envision what it is you want your retirement to look like. If you want to stay in the same house and city and volunteer at local charities, then you will not need to save as much as someone who wants to travel the world on multiple vacations. The manner in which you want to live in retirement will dictate how much money you will need to have saved for your retirement lifestyle. Consider things such as where you will want to live, how much you want to travel, how much of your income will need to be replaced and will you want to work any during your retirement.
Taxes are something that will affect you regardless of if you are retired or not. People want to tend to minimize taxes in the current, but it may, in fact, be better to pay the taxes now and enjoy a tax-free income in retirement. The reason for this is I do not see taxes being reduced with the current political situation and the way the government spends. Consider ROTH accounts if they are available to you. These have the taxes paid now and when you withdrawal the funds in retirement they are tax-free. Not a bad deal really and one that need to be considered in earnest.
Now some people say to rebalance your portfolio every six months I feel if you do it annually you will be better off. The reason I say this is it may save you some money in fees or commissions that rebalancing every six months will cost you. An annual rebalance is more than sufficient to achieve the goals of the strategy.
The last thing that will help you in your career and in retirement is to learn to negotiate better on behalf of yourself. If you think you deserve a raise, go into your boss’s office and negotiate for one if you can. This will help you not only earn more, but you will ultimately be able to save more for retirement as well. If not, be prepared to speak of what other companies similar to yours are paying and threaten to leave. Do this only if you are serious about leaving and do not use it as a bluff tactic.
These are some things you need to be aware of in your 30’s that concern retirement. For more information or if you have any questions, feel free to contact me.
