Americans in their 30s are facing a retirement savings crisis as they may not be saving enough to retire comfortably. According to a study by Northwestern Mutual, the average American believes they will need nearly $1.3 million to retire comfortably, but the median 401(k) balance for account holders in their 30s is only around $20,400. Rising living costs and credit card debt are two of the main factors that have prevented Americans from reaching their retirement savings goals, according to Fidelity’s State of Retirement Planning report.
Despite the low savings rate among Americans in their 30s, experts say it’s not too late to start saving for retirement. Anne Lester, a retirement expert and author, suggests increasing your contributions gradually over time to boost your savings without feeling deprived. By committing to saving a larger percentage of any raises or bonuses towards your 401(k), you can make progress towards your retirement savings goal without making drastic sacrifices. Additionally, taking advantage of auto-escalation features in retirement plans can help you increase your contributions without having to remember to do so manually.
It’s important to prioritize building your emergency savings and getting your employer match on your 401(k) before focusing on other financial goals like taking a vacation. By establishing a savings routine and gradually increasing your contributions, you can set yourself up for a more comfortable retirement in the future. Lester recommends starting by saving enough to earn your employer match, then gradually increasing your contributions as you become more financially secure.
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