Starting retirement savings at 35 (take these actions now)
35 might seem like an unusual age to start thinking about retirement, but the fact is that if you want to have a comfortable retirement, you need to start saving now.
Even if you think it’s a long way off, time will pass, and one day you will want to quit work, work part-time or just do something else. That’s why saving and investing money for your favourite financial future is important now.
Here are some tips on starting retirement savings at 35.
The importance of retirement savings
It’s never too early to start saving for retirement; the earlier you start, the more time you’ll have to grow your savings.
Retirement savings are important because they provide security in your later life.
It’s not lost money; it’s money you will spend later on in life, potentially when you have no other income.
Retirement savings are your future spending power.
That’s why you must start to think and take action on these questions now!
- Where will your retirement income come from?
- Where are your retirement accounts, especially from old employers?
- What retirement income you might need or could expect from your current savings?
- What does a good life look like to you, and what do you think it will cost?
With enough saved up, you’ll be able to live comfortably and not have to worry about money.
However, if you don’t start now, you may not have enough saved up when you retire. In fact, according to a recent study, nearly half of Americans are at risk of not having enough money to cover their basic expenses in retirement.
This is a serious problem, but it’s one that you can avoid by taking action now and starting to plan for a great retirement and life along the way.
Why you need a retirement plan at 35
At 35, you may feel like you have plenty of time to think about retirement, but the fact is that the earlier you start planning, the more time, money, worry and energy you will save.
Retirement planning is important because it allows you to think about what you want your retirement to look like.
Retirement plans should include
- What does a great life look like to you know and later?
- Work part-time, start a business, retrain?
- Do you want to travel?
- Retire early?
- Spend more time with your family?
- What might this cost? How long will it take to accumulate? And are there any gaps?
Why personal finance is so important
Personal finance might seem boring, but getting to grips with your retirement money and what you want it to do for you is a lot easier now than later.
Some key things you need to think about in your personal finance planning
- Do you have an emergency fund 3-6 months of living expenses?
- What is your net worth? Everything you own minus what you owe?
- How much debt and, more importantly, high-interest debt do you have?
- What is your annual income?
- What are your outgoings?
- How much of your money are you saving? The difference between the last 2 points.
- How much money do you need to save or create to make work optional or retire one day?
Creating a retirement plan or a work optional plan gives you a roadmap to follow and helps ensure that you’ll have the money you need when it’s time to retire or stop working.
It’s always easier and quicker to get to where you want to be with a plan or a map.
Or you can try stumbling from one financial crisis to another and see how that works out?
How to start saving for retirement at 35
If you’re behind on your retirement savings, don’t worry, there are still ways to make up for the lost time. The most important thing is to start saving now.
Work placed pensions
One of the easiest ways to increase your retirement savings is to take advantage of any employer match. Most employers will match a certain percentage of your contributions, so you can get free money just by saving for retirement.
Make sure you are getting the maximum about of FREE MONEY you can.
Another way to do this is to automate contributions into your own personal pension. You can set up a direct deposit from your paycheck into your retirement account. This way, you won’t even have to think about it, and your savings will grow over time.
Savings and investments
You can also contribute to non-pension savings and investment accounts. These advantages are that you can get your hands on them when you want rather than wait for retirement age.
Create income-generating assets
Another great way to save for retirement and a work-optional life is to start your own business/s to create income-generating assets.
These usually fall into one of 3 areas.
- Property – renting out a house, room, garage or space for rental income.
- Paper assets- buying funds or shares containing the great companies of the world
- Businesses – creating and owning businesses they sell physical or digital assets.
Any of the above could create you an income or assets to sell to create the income you need now or in retirement to make work optional.
Putting money into assets is going to be far more transformational than just putting extra money into more stuff.
The choice will be about which matches your unique skills and experience the best.
What to do if you’re behind on retirement savings
If you have not started saving for retirement, then there are a few easy things you can do to get going.
- Be clear on your retirement goals – this will help motivate you to reach the retirement savings goal you need.
- Join your workplace pension or set one up if you are self-employed.
- Set up automated payments so it just happens without you thinking about it (as you are probably the weakest link and won’t do it if you have to think about it every month)
- Each year or when you can up your saving, pension and investing contributions.
Final thoughts on starting retirement savings at 35.
Although you might feel like you will live forever and 35 is far too young to start thinking about retirement, now is the time to put in the work for a comfortable, dignified and independent retirement.
If not now, then when?
Each day, month or year you put off, the more expensive, painful and risky it will become to secure your favourite future.
Get the free money on offer through your employer match, automate your savings, track your money and be clear on what good looks like.
Create assets that will provide you with income or saleable items like property, businesses, stocks, and shares. These will be your wealth builders.
The most important thing is to start now. The sooner you start, the better off you’ll be in the long run. Thanks for reading!
If you would like help with your financial planning at 35, take a look at our wealth builder programme.
FAQ saving for retirement in your 30’s
How to save for retirement when you’re in your 30s?
You can do a few things to save for retirement when you’re in your 30s.
First, make sure you’re contributing to a work-based pension so you can take advantage of the free money offer.
Start tracking your finances, so you know what’s coming in and going out.
And finally, start creating assets that go up in value and pay you an income. Things like property, businesses or stocks.
How much should I save for retirement if I start at 35?
This is a great question that doesn’t have a definitive answer since everyone’s retirement needs and plans are different. However, some basic savings guidelines can help you get started.
If you start saving for retirement at age 35, you should aim to have saved at least 1x your salary by age 40. At a minimum, you should be saving 10-15% of your income each year for retirement. If you can do more than this (especially if you have employer matches or other incentive programs), that’s even better.
Ideally, you want to be saving enough so that you can replace 75-80% of your pre-retirement income in retirement. But this all depends on what a good retirement looks like to you and when you want to retire.
How do I plan for retirement at 35?
The best way to plan is to figure out your goals in every area of your life, including when you would like work to become optional.
Secondly, figure out the actions that will be needed to reach those goals.
Thirdly work out what money you will need and where it’s going to come from, including if you need to create more.
And finally, execute your plan daily, monthly and yearly, adjusting as you go along.
How much should I have at 35?
This all depends on what good looks like for you and when you want work to become optional? Probably as much as you can and a little more each year. Enough so that it feels a little uncomfortable.
Where you save, it may be just as an important question.
Cash is not an investment.
Property, businesses, stocks, and shares are assets that can provide you with an income while also going up in value.
What percentage of 35-year-olds are millionaires?
Thomas Stanley and William Danko, authors of The Millionaire Next Door, found that only about one per cent of Americans become millionaires by the time they turn 35. This statistic is corroborated by another study conducted by Spectrem Group, which found that only four percent of Americans have a net worth of a million dollars or more. However, it’s important to keep in mind that millionaire status isn’t always synonymous with financial success. Many people who aren’t technically millionaires still enjoy a comfortable lifestyle.