This Is How Much Money You Should Have Saved by 30 — and What To Do If You Fall Short

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By the time you turn 30, you should have already started forming a solid nest egg for retirement — not to mention an emergency fund and savings for any other major goals you might have.

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Fidelity, a multinational financial services corporation, believes savers should have socked away at least the full amount of their annual salary by that time.

If you’re nowhere near the recommended savings benchmarks, don’t sweat it. Instead, learn how you can put your savings into high gear with these savvy money strategies.

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Increase 401k Retirement Savings

One way you can boost your savings is to bump up your 401(k) contributions. Traditional 401(k) plans allow contributions in the form of pre-tax money, which means that you won’t feel as much of a dent in your take-home pay as you would if you funneled the funds into a traditional savings account with after-tax money.

Some 401(k) plans allow you to opt into a feature that will automatically increase your contribution amount — often by 1% — each year until you reach a maximum of 10%. Even if your plan doesn’t offer this feature, you can increase contributions on your own schedule or whenever your income increases.

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Get in on Employer Matching

Some companies offer matching contributions to employees who hold defined contribution plans, such as a 401(k). If matching is offered where you work, consider taking advantage of it to help reach your savings goals. Otherwise, you’re essentially leaving free money on the table. Plus, you won’t pay any taxes on the funds until you withdraw them for retirement.

Matching contributions could take the form of a percentage of each dollar you contribute, a percentage of your salary or a set dollar limit. Matching funds can sometimes come with a vesting period that can consist of a number of years, depending on your company’s plan, so you might have to stay employed with the company for at least that amount of time if you want to be able to claim the entirety of the 401(k) match money as your own.

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Start a Side Hustle

A quick way to bump up your retirement savings is to snag a side gig that can supplement your regular income. Think about skills you have or hobbies you enjoy that you can leverage to earn extra income each month, such as dog training, personal coaching, tutoring or jewelry-making. Over time, the money you earn can grow into much more if saved and invested effectively.

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Consolidate High-Interest Debt

You can pay off high-interest debt much faster if you consolidate it using a personal loan. A personal loan is an unsecured low-interest loan with a fixed monthly payment. Sometimes, personal loans have lower interest rates than credit cards. Once you consolidate your debt and pay it off, you can divert those funds to your savings account.

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Pay Off Student Loans

A Fidelity Investment study of student loan debt found that, on average, 401(k) participants with student debt contribute 6% less to their retirement accounts than individuals without student debt, plus the following information:

  • 79% of respondents said student loans impact their ability to save for retirement. 
  • 69% reported that they lowered or stopped their retirement contributions by changing their plan or taking loans or hardship withdrawals.  

If you can afford it, prioritize paying off your student loans in 10 years or less, but also take advantage of your employer’s 401(k) match. Once you crush your student loan debt, the monthly amount you budgeted towards student loan payments becomes yours again, so you can use it to boost your savings for retirement, a house or any other goal you have.

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Prioritize Saving Over Debt

If saving is a higher priority for you than paying down your student loan debt at the moment, and your debt is not so high that it could create challenges if you decide to take out a large loan, like a mortgage, you can prioritize pushing extra money toward savings over debt to try to catch up. However, always make sure you continue to make at least the minimum payment on your student loans.


Open an IRA

When you choose an IRA to help reach your savings goals, you have a couple of options: a traditional IRA or a Roth IRA. Traditional IRAs are funded with pre-tax funds and grow tax-free until you withdraw them in retirement, similar to a 401(k). Roth IRAs are funded with after-tax contributions, which means that if you meet requirements, your withdrawals after age 59 ½, including earnings, will be free from federal — and possibly state — taxes.  Additionally, with a Roth IRA, you can withdraw the money you’ve contributed to the account, but not the earnings, tax- and penalty-free. To decide if you should get an IRA or a Roth IRA, consult a tax advisor.

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Automate Your Savings

If you’re self-employed or your employer doesn’t offer a 401(k), you’ll be responsible for opening another type of account to build up your savings. Although there are various types of individual retirement accounts you can take advantage of, you still need to make regular contributions to realize significant gains. To maximize your savings, automate your contributions via direct deposit and increase the amounts at regular intervals. Even if you’re not self-employed, automating contributions can help build up your savings faster than ever.

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Funnel Extra Money to Savings

Although it might not be the most fun use of extra money, the smart way to compensate for a shortfall in savings is to funnel all extra funds to your savings. Any cash gifts, pay raises, tax refunds, bonuses or other windfalls of money that you choose to save will help increase your bottom line. And that will be an advantage when it comes time to tap your savings, be it for retirement or an emergency.

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Claim the Saver’s Credit

For some households, the Saver’s Credit might be an option depending on your income and your tax-filing status. As long as you are contributing to a retirement account, and depending on your adjusted gross income and filing status, you can claim from 10%-50% of the first $2,000 you contribute each year.

Tax credits are issued in amounts up to $1,000 when filing on your own or $2,000 if you are married and filing jointly.  Best of all, if you qualify, you can take this credit on top of other tax benefits offered for retirement savers. Although a tax credit doesn’t give you a refund, it does help reduce your tax bill, which saves you money.

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When In Doubt, Just Keep Saving

It doesn’t matter if you’re $5,000 or $50,000 away from your goal, the best way to build your savings is to just do it. By looking for ways to reduce your expenses and increase your income, you’ll uncover money that you can put away for your future. Plus, once you begin, it might be hard to stop. Being frugal and smart with your money is a habit that, like any other, will strengthen with time. All you have to do is start.

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Cynthia Measom contributed to the reporting for this article.