Whether you’re just entering your 30s and want to start investing or you’re approaching 40 and are worried about your retirement account balance, it’s still not too late for you to start investing. Your 30s are the second-best decade of your life to start investing because of the power of compound interest, so you’re going to want to do everything you can to take advantage of this opportunity to build wealth.
This guide will give you a starting point to investing in your 30s. Here are six strategies to help you get or stay on track with your investing goals so that you can achieve financial freedom:
1. Invest 20–25% of your income.
You should invest at least 20–25% of your income for retirement. Reaching a 20–25% investment rate is difficult, but if you’re a first-time investor in your 30s, you can’t afford to miss out on this critical window for building compound interest.
The returns you get from investing deminish significantly when you enter your 40s, so you want to do everything you can to reach a 20–25% investment rate ASAP—whether that’s investing your skillset so that you can sharply increase your income, searching for a higher-paying job, or cutting back on your expenses.
Many personal finance writers still advise investing 15%, but this percentage is a relic of the 90s and early 2000s when the cost of living was significantly lower and Social Security was still reliable. The price of consumer goods has risen by 21.2% since before the pandemic, and home prices have increased 47% since 2020 alone.
The advice to invest 15% is outdated, and doesn’t consider the fact that that most people start investing between ages 32 and 35, which means they need to contribute more to catch up on retiremen. Investing just 15% could leave you struggling to catch up on retirement if you’re a first-time investor in your 30s.
2. Calculate your retirement number and work backwards.
Your retirement number is the amount of money that you will need to retire comfortably. Your retirement number should not just be the bare minimum of what you think you will need—rather, your retirement number should give you an extra cushion to account for unexpected necessary expenses like large medical bills or other large emergency expenses.
One way to come up with a rough estimate of how much you need is to multiply your annual expenses by 25. Here are some examples of how to find a rough estimate of your retirement number based on your annual expenses:
- $20,000 x 25 = $500,000
- $30,000 x 25 = $750,000
- $40,000 x 25 = $1,000,000
Once you find your retirement number, you can use an savings goal calculator to calculate how much you need to invest per month in order to meet your retirement goal.
Plan for an earlier retirement.
When calculating how much you need to invest per month to meet your retirement savings goal, keep in mind that most people retire earlier than planned.
When you use a savings goal calculator, it’s important to consider that most people retire earlier than planned—and not because they want to retire early. According to a 2024 report by the Transamerica Institute, 58% of retirees retired earlier than planned, and only 21% of those who retired earlier than planned did so because they were financially able to do.
The median retirement age is 62, even though the median expected retirement age is 67. The Transamerica Institute found that 83% of workers age 50+ either expect to retire at age 65 or later or expect to never retire, even though 58% of them retired at age 62.
This means that you should be conservative when you estimate the number of years that you will continue to work. It’s better to underestimate how many more years you will spend in the workforce than overestimate it.
Factor in inflation.
When you use a savings goal calculator, don’t use the highest return possible—instead, use lower rates of return to adjust for inflation. For example, if you expect a 10% or 11% rate of return, then maybe you should use a 7% or 8% return in your calculations to adjust for inflation.
3. Make monthly investment contributions to target a savings goal.
You can also invest a certain amount per month to target a specific retirement savings goal.
If the idea of saving a large retirement nest egg is not possible on your current budget, you can always start with smaller goals and then increase your contributions as you’re able to. Contributing something—even if it’s less than your ideal amount—is FAR better than contributing nothing at all.
The following chart tells you how much you need to invest to have $500k, $600k, or $700k by age 62, assuming an 8% rate of return and monthly compounding:
This next chart shows how much you might need to contribute eaech month if you want to have 750k, 800k, or 900k by age 62, assuming an 8% rate of return and monthly compounding:
This final chart shows how much you might need to invest per month if you want to reach either 1 million, 1.5 million, 2 million, or 2.5 million by age 62:
4. Invest a lump sum.
Another option to help you reach your investment goals is lump sum investing. Lump sum investing involves making one large contribution to your investment account—as opposed to making multiple smaller monthly contributions.
While investing smaller amounts of money on a regular basis is more accessible to most people, lump sum investing could be right for you if you encounter a sudden windfall or if you’ve been saving your money up for a while and you just haven’t known what to do with it yet.
This first chart shows how much you could potentially have by age 62 if you invest a lump sum of $10k to $50k in your 30s:
This second chart shows how much you could potentially have by age 62 if you invest a lump sum of $60k to $100k in your 30s:
5. Meet investing milestones by age.
Age-based investing milestones are also a good, quick barometer to see if you’re on track to retire. According to Fidelity, you should try to these meet age-based investing milestones:
- Have 1x your income invested for retirement by age 30
- Have 2x your income invested for retirement by age 35.
- Have 3x your income invested by age 40.
Here are some examples of meeting Fidelity’s investing milestones by age:
- If you make $40,000, then you should have at least $40,000 invested for retirement by age 30.
- If you make $35,000, then you should have $70,000 invested for retirement by age 35.
- If you make $50,000, then you should have at least $150,000 invested for retirement by age 40.
If you’ve just received a substantial raise, you can use the average of your last few years for your salary.
And while some argue that age-based investing milestones aren’t useful because what really matters is how many multiples of your annual expenses you have invested—to retire, you need at least 25x your annual expenses saved—age-based investing milestones are still a good, quick way to determine whether or not you’re on track to retire.
6. Reach $100k in investments as soon as possible.
Most people in their 30s have not yet met their most important financial goal: investing $100k.
According to Fidelity, the median 401k balance for workers in their 30s is just $22,100. Similarly, Vanguard notes that the median retirement account balance for workers ages 25–34 is $14,933, and the median retirement account balance for workers ages 35–44 is $35,537. And most people become first-time investors between the ages of 32 and 35.
So if you’re in your 30s and have less than $100k invested in your retirement account, you absolutely need to make having $100k in retirement savings your highest priority. Here’s why: After you reach that first $100k, you start earning significant amounts of compound interest, which makes it even easier to reach $200k even if you keep investing at the same rate.
The time it takes to reach each subsequent $100k-interval becomes shorter and shorter due to the power of compound interest generated by that first $100k.
I created this infographic to illustrate why this first $100k milestone is so powerful:
According to this infographic, if you invest an average of $500 per month with an 8% rate of return, it takes about:
- 10.63 years to reach $100k.
- 5.67 more years to reach $200k.
- 3.89 more years to reach $300k.
- 2.97 more years to reach $400k.
- 2.40 more years to reach $500k.
As a general rule, your wealth starts to skyrocket after 100k no matter how much you invest—but that doesn’t mean you should stop investing once you hit 100k. For example, if you only invest $100 a month, it will take you:
- 25.54 years to reach $100k.
- 7.84 years to reach $200k.
- 4.79 years to reach $300k.
- 3.45 years to reach $400k.
- 2.70 years to reach $500k.
These examples show that you do NOT need to be rich to build wealth—you just have to make reaching $100k ASAP your top priority. If you want to accelerate your wealth building journey, reaching $100k as soon as possible is the single most important thing you can do.
To help you reach this important goal, I created this chart that shows how much you might need to invest per month or per year if you want to reach this goal in 15 years or less. This chart assumes you have an 8% rate of return, although there are no guarantees in investing:
If you want to accelerate your wealth building journey, reaching 100k as soon as possible is the single most important thing you can do because that initial 100k will skyrocket the amount of compound interest you earn.
There are many ways to approach saving for retirement, but investing 20–25% of your income, calculating your retirement number, making monthly investment contributions to target a retirement savings goal, investing a lump sum, meeting age-based retirement savings milestones, and reaching 100k as soon as possible will all help you get on track or stay on track to achieve financial freedom.