People in their 30s may be a long way off from their retirement savings goals, but they have plenty of time to get on track.
On average, Americans say they’ll need around $1.46 million saved up to retire comfortably, according to Northwestern Mutual’s “2024 Planning and Progress” study. And for millennials, the majority of whom are in their 30s, that number is a little over $1.6 million.
However, many in their 30s have much less than that saved.
The median 401(k) balance for people in their 30s is around $22,100 as of the first quarter of 2024, per the latest data from Fidelity Investments, one of the country’s largest 401(k) providers.
Here’s how much Americans have in their 401(k)s by age, according to Fidelity.
To be fair, many Americans are stretching their funds to cover a number of expenses which may impact their ability to save more for retirement.
Over a third of people cite the rising cost of living as an obstacle to reaching their retirement goals, per Fidelity Investments’ “2024 State of Retirement Planning.” And nearly 30% say that paying off credit card debt and unexpected expenses are barriers.
How to get your retirement savings on track in your 30s
If you’re in your 30s and worried about your retirement savings, the good news is that you have time to get on track.
First off, rather than solely focusing on your account balance, which can be impacted by factors such as market volatility — and which will ostensibly grow at a compounding rate over time — take a look at your savings rate. That’s the percentage of your pre-tax annual income that you set aside for retirement each year.
Fidelity recommends a savings rate of 15% which includes your employer’s match, if offered. However, you may need to increase that savings rate if you’re just starting in your late 30s, compared to your earlier years, says Anne Lester, a retirement expert and author of “Your Best Financial Life: Save Smart Now for the Future You Want.”
“If you’re starting at 39, you’ll need to save a bit more aggressively than if you were starting at 32 or earlier,” she tells CNBC Make It.
To that point, if you’ve got nothing saved for retirement, Fidelity recommends a savings rate of 18% if you’re starting at age 30 and 23% if you’re beginning at age 35.
One way to reach that suggested savings rate is through auto-escalation, which allows you to set your retirement contributions to automatically increase by a certain percentage each year. For instance, you could automatically increase your savings rate by 2 or 3 percentage points each year until you reach your target rate.
Another way you can give your retirement savings a boost is by mentally preparing yourself to set aside a portion of any financial windfalls you may receive in the future such as raises or tax refunds, Lester says.
“Those raises and refunds are one way you can relatively painlessly start saving for retirement because you’re not giving anything up you already have,” she says.