In this article we will look at the retirement outlook for 30 somethings. Discover some of the drawbacks but more importantly the opportunities that this group of 30 somethings has to creating a great retirement future.
Like most 30 year old’s, planning for your retirement is not foremost on your mind. But it should be, in fact you should have been focusing on your retirement nest egg in your 20's. And the reason is simple, the younger you start saving for your retirement years the more money you will have when you decide to retire.
What is the retirement outlook 30 somethings?
As a 30 something you may not be in such great shape. Social Security may not be there for you when it is time for you to retire. It is estimated that Social Security may be unfunded to as much as $130 trillion. So there are really on 2 options for the Social Security fund.
1-Raise Taxes To Save It.
2-Get Rid Of Social Security All Together
Neither of those 2 are very good options.
Retirement Income Needed Today.
According to this survey by the Transamerica Center for Retirement Studies, the median retirement savings for someone in their 60's, in the U.S., is $172,000. The suggested saving you should have by your 60's is 8 to 10 times your annual salary. So it you were making $50,000 as your annual salary and you wanted to retire at 65, you should have a retirement savings account of around $500,000 dollars.
As you can see the average U.S. citizen is extremely unprepared your their retirement years and that is why so many in our elderly population are having to rejoin the workforce.
How Much will 30 somethings Need For Retirement?
The money you will need for your retirement will vary and keep in mind that salaries don't always mirror or keep up with inflation. Also, inflation has a lot to do with how the economy is working in any given year so we went with a inflation rate of 3%. That being said the numbers would look something like this: A $50,000 income now will equal about $118,000 in the year 2050 and a $500,000 retirement account now will require about $1.18 Million in savings by the year 2050.
3 Ways To Save For Retirement.
Here are a few ways you can help jump-start the retirement income you will need as today's 30 something.
- Ask For A Raise: As obvious as that may sound, most people are leary to ask for a raise because they are afraid to get denied. But you would be surprised how many times people get a raises when they ask for one. And if you feel like you are worth more money than you are receiving at your present job, then you have the option of going out into the job market and finding a new opportunity that will pay you more.
- 401K: This is a no brainier, if your employer offers a 401K plan and is offering to match funds, enroll, this is free money from your employer, The 401K is a tax differed plan so you will not get taxed now but you will get taxed later. Another alternative to the 401K is a Roth IRA, in a Roth you get taxed on your contributions now but you you have little to no tax liability later. there are penalties you will have to pay for early withdraw on both plans, read the plans carefully.
- Life Insurance: Yep, I said life insurance! 95% of people have no idea that life insurance has been the secret investment strategy of the wealthy for decades, and life insurance is pretty affordable when you are in your 30's. It's called the best savings plan you never heard of! This is a long term play, but with the right plan you can take advantage of the stock market without any risk of loss due to market volatility and over the last 20 years you are looking at 8%- 12% returns.
Start Planning For Retirement Now.
As a 30 something planning for retirement, now is the time to start planning, you have some many options open to you, but do your research. Find a financial advisor you can trust and ask him or her the hard questions. How do they get paid, where do they have their money invested and why, how diverse is their portfolio.
I would look far an advisor who is either invested in or suggest you invest in at least 3 different types of investments, (Markets, Insurance and Real Estate are common). If he or she is incline to push one investment strategy over another or try to steer you away from one strategy because it's the wrong investment, find a new advisor, there are no sure things in life and every investment strategy has it's drawbacks and risk, that's why diversity is key in your retirement plan.
With that being said, you need to plan for the future because your future is now, and time passes quickly. Now is the time to start creating wealth for you, your family and your legacy. If you are a 30 something now is the time to start building your retirement empire.