In your 30s, push the share of your pay you save for retirement toward 15%, counting any employer match, by adding half of every raise to your contribution. Keep most of that money in stocks, and don’t cut those contributions to pay for a house or the kids’ college.
Your 30s tend to bring bigger paychecks, and bigger costs competing for them: a down payment, child care, and a college fund. Saving for retirement is the easiest goal to shortchange, because no bill arrives when you skip it.
Fidelity suggests saving at least 15% of your pre-tax pay for retirement each year, counting what your employer adds. That rate assumes you start at 25 and retire at 67. If you start from nothing at 30, Fidelity’s target rises to 18%, and from 35 it’s 23%.
To see where you stand, compare your retirement savings with Fidelity’s benchmarks by age. They use the same assumptions and call for at least one year’s salary saved by 30 and three times your salary by 40.
Raises are the easiest time to save more, because half of each raise can go to retirement while your take-home pay still grows. On a 4% raise, that means contributing 2 more percentage points of your pay.
Say you’re 35 and earn $80,000. You put 8% of your pay into your 401(k), and your employer adds 3%. Raising your contribution from 8% to 12% invests an extra $3,200 a year and brings your total, match included, to 15%.
Then hold that rate when other goals compete. Put retirement ahead of the kids’ college. Build a down payment on top of your contributions, and keep it in savings, not stocks. Keep the retirement money itself mostly in stocks, since you won’t need it for decades. Add bonds only if you need them to sit through a steep drop without selling.
Before your next raise takes effect, log in to your plan’s website and add half of it to your contribution rate, so you never start spending that half.
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