Welcome to the Knowledge Center
Get the Most Out of Retirement — Plan in Your 30s
Travel the world, build a second home, go back to school–there are so many things you can do to get the most out of your retirement, as long as you're financially prepared for it. But how do you ensure you have the financial freedom to enjoy retirement? Start planning in your 30s. And with this guide, we’ve pulled together everything you need to know about planning for retirement when you reach the big three zero.
Boost your 401(k) savings
In an ideal world, you'll pay in the maximum allowable contribution each year to employer-sponsored funds like a 401(k). That's $19,500 for the year, which is $1,625 per month. Even if you can't pay the maximum, it's worth contributing as much as possible.
A 401(k) is an investment type that can set you up well during your retirement. You can also do things like put raises into your retirement spending rather than saving them. Every slight increase can make a significant difference in the long run, setting you up nicely in retirement.
Best of all, contributions go straight into your 401(k) account from your paycheck. There's no need to do anything, and you build up a nice little egg to get the most out of your retirement. Did some say it’s time to travel the world?
Get a Roth IRA
Use a Roth IRA to top up your 401(k). With a 401(k), your contributions go in a pretax, meaning they're taxed when you withdraw them in retirement. However, a Roth IRA's contributions are after-tax, and there's no tax to pay in retirement.
The tax diversification element is one of the primary reasons to combine a 401(k) with a Roth IRA. It’s not all plain sailing, though, as IRAs tend to have lower annual contribution limits ($6,000 or $7,000 if you’re over 50), so it’s easy to max them out if you’re on a decent salary.
Still, IRAs offer you the chance to save for retirement and provide a pretty good payout as long as you pay a decent sum of your salary and start in your 30s. There’s also the added bonus of withdrawing your Roth IRA without needing to pay the taxman.
Collect those assets
Saving with a retirement account sounds all good and sensible, but what else can you do to set yourself up financially when you’ve finished working? That’s where assets come in, be it stocks and bonds or real estate.
Investing in stocks and bonds offers high rewards for those who know the market and are willing to play it. Of course, the downside is that you could lose money due to market volatility–especially if you’re not a pro when it comes to this type of investing.
However, if you start early and make sensible investments, your age stands you in good stead. Younger people are better able to weather setbacks and wait for rebounds, as you have time on your side and can play the market for the long term.
The other option involves investing in real estate. It's perhaps the safer bet, as house prices tend to be much more stable than the stock market. Whether you're buying property and flipping it with the intention of making a quick profit or holding onto something longer term and renting it out, bricks and mortar can prove to be a savvy move that sets you up well in retirement.
Get a permanent life insurance policy
Offering your loved ones financial security in the event of your death is a primary reason why people get a life insurance policy. The death benefit offers financial protection and can help your beneficiaries maintain their way of life. But it's not the only reason to get a life insurance policy.
Not many people realize that permanent life insurance coverage can set them up well in retirement. That’s because it has something called cash value, which allows you to build wealth while you’re still alive.
When you pay into your premium, you’ll cover two aspects: the death benefit and cash value. Both of these grow over time, and you can withdraw the accumulated wealth during your retirement and start living the good life in your old age.
Even better, the wealth you’ve accrued is tax-free. When you withdraw cash in a permanent life insurance policy, you do so in the form of a 0% loan to yourself. And because you can’t give yourself tax, there’s no need to pay anything on top.
When you pass away (hopefully many, many years later), your death benefit pays back the loan. However, because it’s also grown over the years, there should be plenty left over to help out your beneficiary financially.
Having the ability to save money makes a permanent life insurance policy a smart savings account that helps you get the most out of your retirement. Your premiums stay the same the entire time, so if you start in your 30s, you'll pay the same amount each month, and it will never go up. Plus, you get the added bonus of a death benefit, which protects your loved ones should you pass away.
In conclusion: Getting the most out of your retirement and beyond
Retirement might seem like a long way off when you’re in your 30s, but being prepared will help you enjoy the finer things in life in your older years. Fortunately, there are plenty of options when it comes to getting the most out of your retirement, and you can invest in all of them–be it a 401(k), real estate, or a permanent life insurance policy that allows you to build wealth. Then you can put your feet up and enjoy retirement in style.