How Much Should You Be Saving In Your 30s?

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Saving money in your 20s is smart. Saving in your 30s is almost mandatory if you want a bright financial future.

Let’s assume you’re 30 years old with a net worth of $10,000. This means your net worth is average for your age. Comparing your net worth to others isn’t a necessary consideration. However, using this standard is a good way of determining if you are pacing your peers.

So how much money should you be saving in your 30s? Of course there’s no exact figure, but a good target is 15% of your income. Are you already saving 15%? Are you behind?

Whether you need to catch up or work hard to stay ahead, this article will tell you what smart moves to make in order to leap ahead of your peers.


A Roth IRA lets you contribute for the current year and for the previous year up until you finish your taxes from the previous year. If you’re just beginning to save, contribute as much as possible toward a Roth IRA for the previous tax year. For those younger than 50, $5,500 is the maximum amount you can contribute to your Roth IRA for a single year.

Then take a breath because you have until next year’s tax season to contribute this year’s $5,500. You can easily open a Roth IRA at any online or offline brokerage firm, such as Edward Jones, Vanguard, Fidelity or TD Ameritrade. You just have to prove you earned at least $5,500 for the year you plan to contribute.


You could also play catch-up by tapping into (or cashing out of) cash value insurance policies. This may instantly feel like a bad idea. But it may be appropriate for your situation. Ask yourself, “Do I really need this insurance policy?” Life insurance policies became popular in the late 20th century, and many financial advisors would convince their advisees that these policies are great for their children. However, life insurance isn’t generally appropriate for children.

Life insurance becomes necessary when there are people who depend on your income. People today typically don’t have life insurance until they have children. Once they have children, they buy what’s called term life insurance. Consult this article to learn what taxes will apply for leaving a life insurance policy.

If you are playing savings catch-up, fear not. You have time to correct your course. It’s not until age 50 that most retirement plans allow for catch-up contributions. And catching up when you’re 30 is far less of a problem than trying to catch up at 50!


The 401(k) is a powerful tool for staying on course. Most companies offer a 401(k). Government employees are offered a 403(b). These are tax-advantaged savings accounts. If your organization offers a match, consider contributing at least up to the match. They are giving you free money. An average 401(k) match today is 2.7%. However, many large companies offer closer to 7%.

Contributing to a 401(k) — especially if your employer matches — is an easy way to get close to your 15% savings goal. If your company doesn’t match, consider packing up your desk. A bigger 401(k) match trumps a bigger salary. If you’re self-employed, you can choose from a SEP (Simplified Employee Pension) plan, the SIMPLE (Savings Incentive Match Plan for Employees) IRA, and the solo 401(k). Use any combination of these accounts to your full advantage.


As mentioned earlier, you can contribute to your Roth IRA or traditional IRA each year. The contribution limit for someone in their 30s is $5,500 per tax season. Outside of your company’s matching retirement plan, the Roth IRA should be your first stop. Unlike the traditional IRA, the Roth offers tax-free withdrawals. This means your invested gains will not be taxed.

A traditional IRA is OK but it’s tax-deferred. That means you will pay taxes on withdrawals. Since you can only contribute $5,500 total, you’re better off at age 30 to put that money in your Roth IRA. Try contributing $5,500 each year of your 30s. That’s $55,000 saved. If invested, with a return of a very reasonable 8%, your $55,000 will be worth over a quarter million dollars at age 65.


Once you invest in your company’s plan and a Roth IRA, you will most likely be saving 15% of your income. If you still need to find ways to save, a taxable investment account is the next step. It’s not glamorous. Nor is it tax-advantaged. But one common tax savings measure is to put foreign investments in this account. This will allow you to take advantage of foreign tax breaks.


You should have 3 to 6 months’ worth of expenses set aside in liquid assets. Many people use their checking account as an emergency fund. The average American spends $94 per day in stores, restaurants, fuel stations and online. Plus they have monthly bills to worry about. Consider all your costs when building up your emergency fund.


If you earn $40,000, 15% of your income is $6,000. Consider saving more than 15% if you would like to outrank your peers. It’s a wise idea to begin saving money as soon as possible. The reason it’s important to save early is because of time and because of compound interest. After all, it was Albert Einstein who called compound interest the “eighth wonder of the world.”