Americans in their 30s have about 30 years until they reach retirement age, but they may not have enough savings to retire comfortably.
On average, Americans believe they will need nearly $1.3 million to retire comfortably, according to Northwestern Mutual’s 2023 Planning and Progress Study.
But Americans in their 30s currently have much less saved. The median 401(k) balance for account holders in their 30s is about $20,400, according to the latest data from Fidelity Investments, the nation’s largest 401(k) provider. The data is from the fourth quarter of 2023.
There are several possible reasons for the low amount. Just over one-third of Americans say the rising cost of living is preventing them from achieving their retirement goals, and 27% say paying off credit card debt is an obstacle, according to a Fidelity survey. Answered. Current state of retirement planning in 2024 report.
According to Fidelity, here’s how much 401(k) Americans have in their 401(k)s by age as of the fourth quarter of 2023.
The good news is that it’s not too late for people in their 30s to get back on track, says Anne Lester, a retirement expert and author of .Your best financial life: save wisely now for the future you want. ”
“There’s a lot of time,” she told CNBC Make It. “You’ll end up saving at a slightly more aggressive rate than if you started earlier, and that’s OK.”
People in their 30s put about 11% of their salary into retirement savings, including employer matches, which is just below the 15% savings rate. Recommended by Fidelity.
One way to increase your savings rate without feeling like you’re sacrificing too much is to increase your contributions by 1% or 2% each year, Lester says. Many plans even allow you to do this automatically with an auto-escalation feature, so you don’t have to remember to change your contributions each year.
“You don’t have to do everything at once,” she says. “The trick is to do it really slowly so you don’t feel like you’re being deprived.”
However, if you don’t have anything saved for retirement, you may need to make short-term sacrifices, such as putting a larger percentage of the raise you receive into your 401(k) or setting aside more money for your future. There may be. It’s either a bonus or a tax refund, Lester said.
“If you promise to save money for future raises, it’s actually less painful than you think,” she says.
Please note that these adjustments do not have to be made permanently. Once you feel like you’re on track with your retirement savings goals and other financial priorities, it’s okay to start rewarding yourself, Lester says.
“My recommendation is to build up your emergency savings, contribute enough to your 401(k) for an employer match, and then save for good things like vacations,” she says. says.
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