Financial Planning

Want to Retire in Your 30s? Here’s How to Do It.

By  Nathan Mueller

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Have you ever wondered how to retire early? The idea of retiring in your thirties is enticing, but the cost of living is so high today that it seems out of reach. I used to feel the same way. I wanted to live right and spend less, but it seemed like a pipe dream. Then, after a lot of hard work and minimalism, I made it a reality. Here’s how to retire early successfully.

To Retire in Your Thirties, Start Saving Early

Saving for retirement is a lifelong endeavor. But it’s never too early to start. If you’re still in your 20s or 30s and have decades before you’ll retire, there’s no time like the present to get started.

Here are some steps to help you start saving for retirement:

  • Assess your finances: Sit down with your partner or spouse and figure out what you’re doing right, what you’re doing wrong, and where you can improve. Try using a budgeting app like Mint or Personal Capital to get an accurate picture of your spending habits (and income).
  • Create a plan: Now that you’ve assessed where your finances stand right now, create a plan for how much money you’ll need at retirement age. You can use an online calculator to estimate how much money will be needed for your specific situation. This will help guide decisions about where to save and invest the money and how much time needs to be spent on other financial obligations such as paying off student loans or saving up for a down payment on a house or condo purchase.
  • Open an account: Open a dedicated retirement account and make regular contributions.
  • Save as much: Max out the annual contribution limit for your chosen retirement plan and continue making monthly contributions until you reach your goal. Increase your contribution rate each year until you reach the maximum amount allowed by law (depending on your age).

Work on Your Credit

If you’re planning to retire in your thirties, it’s essential to work on your credit. When you retire, you’ll have a good credit history to show potential lenders, landlords, and other creditors that you can be trusted with their money.

To improve your credit, follow these steps:

Check your credit report for errors: You’re entitled to a free copy of your report once per year from each of the three major credit reporting agencies (Experian, Equifax, and TransUnion).

Related: Which Credit Report Should I Request?

You can get them all at once or stagger them throughout the year; It doesn’t matter as long as you get them all! But be sure to check each report thoroughly for any inaccuracies. If there are any errors on your report that aren’t yours, for example, if someone else has stolen your identity and applied for loans using your information, you need to contact each agency immediately so they can investigate and fix the problem.

  • Pay off debt and close accounts: Consider paying them off first if you have high-interest loans, such as credit card debt. Also, consider closing any accounts that have accrued interest over time. This will lower your overall credit utilization rate, which helps improve your score.
  • Use the right type of credit: Open up a secured credit card and use it sparingly for small purchases like gas or groceries. This type of credit will help increase your overall score without affecting it negatively.
  • Keep all balances under 30% of your limit: Having multiple lines open with no balance is considered good practice for building up scores. It shows lenders that you can handle multiple accounts responsibly without being overextended in any one area at any given period.

Calculate Your Retirement Income Sources

If you’re planning to retire early, you’ll need to ensure your income will be enough.

You’ll need to calculate what you have in savings and other assets to do this. You’ll also want to estimate how much money you’ll earn from Social Security and other sources. And finally, you should factor in any expenses that might come up during retirement.

This is a lot of information, but don’t worry: several free retirement calculators can help you plan for your future.

Related: Retirement Calculator

To calculate your retirement income sources, you’ll need to know:

  • The amount of pension income you’ll receive from Social Security, pensions, or other sources
  • The number of social security benefits for which you qualify (if any)
  • The amount of income tax deduction that will be taken out of each paycheck (if any)
  • Any additional savings vehicles like 401(k)s or IRAs

Start Investing and Diversifying

Investing is the best way to save money. The earlier you start, the more time your investments have to grow and compound. If you start investing as soon as possible, you’ll be able to retire in your 30s, 40s, or 50s-much sooner than if you wait until later.

Diversifying is another key step in preparing for retirement. Diversification means spreading your money across various investments so that no one investment will have too much influence over your portfolio. For example, when you invest in stocks, you should also put some money into bonds and other types of investments so that when one kind of investment does poorly, others may do well enough to make up for it.

Develop a Withdrawal Plan

You’ve saved up a bunch of money, and now you want to retire early. Congratulations! That’s a great goal to have.

But before you can pull the trigger on early retirement, there are some important steps you need to take. Developing a withdrawal plan is a critical step. This is basically working out how much money you’ll be able to withdraw from your savings each year without running out of money before you die (which is the point of saving). This sounds like a lot of work but don’t worry-we’re here for you.

The following steps will help you develop that plan:

  • Determine how much money you need per year to live comfortably in retirement.
  • Determine the percentage of your portfolio that should be withdrawn each year.
  • Calculate how much money you need to set aside over your working years to cover this withdrawal rate and still allow growth in your investments.
  • Create a withdrawal plan based on the amount needed each year and how much you’ve managed to save up over time (both in your 401(k) account and outside of it).

Work With a Financial Advisor to Retire in Your 30s

Want to retire in your thirties? If so, you’ll need to work with a financial advisor. Financial advisors can help you figure out how much money you’ll need to save and invest in having the retirement lifestyle you want. They can also help you figure out how much risk you’re willing to take and how long your investments should last.

Related: Fiduciary Financial Advisors: Everything You Need To Know | Picking a Financial Advisor Big or Small?

Financial advisors are not all created equal, though. Here are some things to keep in mind when looking for one:

  • Do they have experience with people who want to retire early?
  • Are they a fiduciary advisor?
  • How do they charge? We recommend fee-only financial advisors.
  • Do they have an education background that’s relevant to retirement planning? (You might want someone who has majored in finance or economics.)
  • What kinds of services do they offer? Do they work with individuals or businesses? Do they offer investment advice, tax advice, estate planning advice-or all three? How many clients do they serve at any given time?
  • What kind of experience do they have in this field? How long have they been working as a financial advisor? What credentials do they have that qualify them as one (like a CFP certification)?
  • How will we communicate with each other once you start working together?

Final Word: You Can Retire in Your Thirties

Early retirement in your thirties is possible. You can escape from the 9-5 and live full-time on your investments. The simplest way to do that is by saving a lot and investing it well.

But, are you saving enough? Would you rather not spend your retirement years watching over your shoulder with a boss? Are the savings you have right now enough to retire early? In this post, you learned how to prepare for early retirement.

Nathan Mueller Headshot

Nathan Mueller, MBA

Founder and Principal Financial Coach for BlackBird Finance

Nathan guides people on how to overcome money challenges, grow their wealth, and understand the intricacies of their personal financial circumstances. He is the founder and principal financial coach for BlackBird Finance. Website | Wealthtender Profile

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Disclaimer: To make Wealthtender free for our readers, we earn money from advertisers, including financial professionals and firms that pay to be featured. This creates a natural conflict of interest when we favor their promotion over others. Wealthtender is not a client of these financial services providers. Learn how we operate with integrity to earn your trust.