Your Big Retirement Milestones: 30s and 40s

Alina Myakota |

Individuals each have their distinctive retirement timelines, needs, and strategies. However, universal factors such as Social Security, Medicare, and IRS regulations mean that retirement planning milestones are encountered in a generally similar order and life stage for everyone. 

Learn what big milestones you will face on your financial journey.

In Your 30s

Enroll in 401(k)

Is there a retirement plan, such as a 401(k), available through your employer? If so, consider enrolling. It's a simple and effective way to automate your savings. Additionally, check if your company provides matching contributions. This essentially means they will contribute an amount equal to what you contribute, typically up to a certain percentage of your salary. Don't miss out on this opportunity for additional funds towards your retirement.

Keep an Eye on Your Debt

Don't let debt weigh you down! If you do have any debt, keeping it under control is one of the most crucial aspects of your financial journey! This is because overspending can hinder your ability to afford future expenses, consume additional income, and result in poor credit. Creating a budget and paying off any loans will help you save money long-term and achieve your goals. 

Assess Your Insurance Needs

Consider reviewing your life insurance needs, particularly if you have young children. As the cost of caring for their basic needs increases each year, life insurance becomes crucial for maintaining your family's lifestyle and safeguarding your assets in the event of your passing. Seeking advice from a financial professional can help you determine the most suitable options for your situation. Schedule a meeting with us to help you get started!

In Your 40s

Max out your retirement accounts

During your peak earning years, it's crucial to prioritize savings for retirement. At this stage, with potential benefits from an employer-sponsored health plan and a potential break from the expenses of raising children, capitalize on these advantages by maximizing your contributions to retirement accounts.

Start building tax diversification

Tax diversification involves purposefully spreading your assets across different investment accounts with varying tax treatments. Just as you diversify your investments, it's equally important to diversify the taxation structure of your retirement accounts. In practical terms, this approach entails allocating your assets across a mix of accounts-taxable, tax-deferred, or tax-advantaged. By adopting this strategy, you achieve a more balanced distribution of your tax liabilities over your lifetime. 

Roth IRA Contributions

If you haven’t started one yet, it is never too late - there is still time to contribute! Roth IRAs offer significant advantages, such as tax-free withdrawals during retirement and the flexibility of penalty-free withdrawals of contributions at any time. One of their key benefits is independence from your employer, providing you with greater control over your retirement savings strategy.

No retirement savings at 40? Here's what to do | CNN Underscored Money

These strategies can help you ease your worries and make your financial journey more successful. By starting early, following and adjusting your retirement plan and avoiding common mistakes, you will be able to achieve your goals and ensure a successful retirement. Check out more tips for your retirement here!