30 Years From Retirement? Here’s How to Invest While There’s Still Time

You’ve probably heard that time can be on your side, and compounding interest makes that true if you’re saving and investing 30 years from retirement. Compound interest is paid on interest you’ve previously earned, and the more time you give your money to compound interest, the more you’ll have when you hit your target date.

It’s not quite that simple, however, with several types of accounts to choose from and other issues you might want to consider.

Your Current Financial Position

You can’t save and invest until you know how much you can afford to budget for that purpose. Pinning down your net worth can provide you with this information and help you get started. Your net worth is a simple calculation of what you own versus what you owe. Add up the value of everything in the first category, then subtract the total of your debts.

The resulting number might be jolting, depending on your age. It could even be negative, such as if you just bought your home and haven’t had time to pay down your mortgage.

“Your net worth can be a simple point of reference for how you’re doing financially,” said R.J. Weiss, Certified Financial Planner and CEO of The Ways to Wealth. “The goal is to see it go up over time.”

How Much Should You Save?

A commonly accepted guideline is that you should strive to have saved the equivalent of your yearly income by the time you reach the age of 30. If you earn $60,000 annually, you should have that much tucked away by the time you are 30. This increases to three times your annual salary by the time you reach 40.

Even if those numbers are not realistic based on your income and other circumstances, it is important to prioritize retirement savings when creating your personal budget. Just as housing, transportation, food, and more are considered necessities, building a nest egg should be too.

Your Retirement Savings Options

Compound interest earned on an everyday savings account isn’t going to be sufficient to pay your bills in retirement. You’ll want to consider some other options. IRAs and employer-sponsored plans are some of the most common.

• IRAs: Traditional and Roth individual retirement accounts differ primarily by when they are taxed. Contributions to traditional IRAs are tax-deductible, but you pay taxes on that money when you begin making withdrawals in retirement. Roth IRAs are the opposite. The choice comes down to whether you’re more likely to be in a higher tax bracket when contributing to the account or when making withdrawals.
• Employer-sponsored plans: Many employers sponsor 401(k) or similar plans, such as 403(b) plans offered by nonprofits and public schools, or 457(b) plans offered to government employees. Contributions are automatically deducted from your paycheck, and some employers even match a portion of the money you invest. You’re not taxed on this money at the time it goes into your plan because your contributions are deducted from your pay before taxes are calculated. You’ll pay taxes at the time of withdrawal, however.
• CDs, savings, and other bank accounts: The higher the federal funds rate is, the more favorable the rates will be that you can get from banks on certificates of deposit (CDs), high-yield savings, and even some checking accounts. CDs allow you to lock up a high rate for a fixed term, while high-interest savings, checking, and money market accounts can provide meaningful earnings on your liquid bank accounts. Use the earnings from these accounts to help supplement your contributions to IRAs or employer-sponsored plans.

Increasing Your Retirement Contributions

Even if you don’t think you can save a meaningful amount, Weiss said it is best to just begin with whatever you can, even if it is small, then grow from there.

“You don’t have to start by saving 20% or some big number right away,” he said. “Even starting with just 2% in your 401(k) is a win. Then have a plan to increase it by 2% every 90 days. You could be up to a 16% savings rate in two years.”

IRS rules stand by to help you catch up if you reach the brink of your golden years and don’t have quite enough set aside. “Catch-up contributions” are allowed for those age 50 or older:

Type of Account	2025 Contribution Limit	2025 Catch-Up Contribution
401(k), 403(b), 457(b)	$23,500	$7,500
IRAs	$7,000	$1,000

Important

The SECURE 2.0 Act of 2022 provides another bump for those aged 60 through 63. Their contributions to employer-sponsored plans increase from $7,500 to $11,250 in 2025.

Choose Your Investments Wisely

You’re not limited to a 401(k) or IRA. You can put your money into another type of investment, but this option involves some additional considerations, including your risk tolerance and working with a brokerage firm:

• Exchange-traded funds (ETFs) and mutual funds allow you to hold an array of securities in one investment, diversifying and balancing their risk quotients.
• Target-date funds are also a compilation of stocks and bonds. They’re designed to take on more risk when you’re in your 30s and have time to recover from losses.
• You can also invest in a variety of stocks. This approach may be best suited to a younger investor who has time to weather any significant ups and downs in the market.

“If you’re 30 years out from retirement, most advisors would typically recommend having at least 90% in equities,” Weiss said. “That usually means index funds like the S&P 500, along with a possible mix of international assets. A more moderate approach might shift that to something like an 80/20 split between stocks and fixed income, using long-term government bonds to add some balance and stability.”

Pay Down Debt

Some debt for large expenses—such as student loan debt or a mortgage—can be unavoidable, but your bottom-line goal should be to conserve now and shift money to your future needs.

If you have any bad debt, such as credit card balances, prioritize paying those down as you create a budget and stick to it. If you do use a credit card, be sure to pay off the balance each month to avoid paying interest. You might even consider using a type of cash-back card that forwards rewards directly to your 401(k). You may need a car for transportation, but seek a cheaper, perhaps used, vehicle to keep your loan payments and insurance costs as low as possible.

If your debt seems unmanageable, it may be a good idea to seek assistance from a financial advisor or debt management company.