How much money should a 30 year old have in their retirement account at this point?
Well, let's start by getting rid of the word 'should.' This suggests some rights and some wrongs, which of course is not a useful way to look at any financial matters!
Let me answer your answer obliquely. Financial management always involves balances and compromises, the playing off of one need against another. For example, should you (there we go again!) have life insurance, which protects you and your dependents, but costs money, or should you save the money you would otherwise have spent on premiums?
Many 30 year olds will have little or no savings, because they are devoting all their income to a partner or family, and are rightly ensuring their safety and everyone's quality of life. It actually doesn't matter if you don't have anything saved for retirement at that point; however, if you can, it will be wise to be moving forward on four fronts at same time:
1 Start, or continue with a long-term savings plan.
2 Start, or continue with regular pension contributions
3 Make sure that you have enough available funds for short-term needs, as a separate category from item 1 (which you don't touch!)
4 Make sure that insurance and protection issues are properly understood and addressed.
I hope this helps.
| 12.23.10 @ 22:44
Another point to add is this:
what kind of lifestyle do you currently have? and do you expect it to improve between now and when you retire (whenever that might be, just because the state retirement age will be 68 for you (or more) that doesnt mean you HAVE to work until then).
If you live a very modest lifestyle and dont holiday outside of the UK, shop in lidl (which i am sure is a great shop but im just illustrating a point) you wont be able to retire on 3 foreign holidays a year and shopping in waitrose without putting money aside but as David mentions you need to balance having a life now and ensuring that your current standard of living is protected and then planning to maintain or improve for retirement.
you have extremes to consider:
blow all your money now and then get a nasty shock when you realise the £100 weekly state pension wont go far if you make it to 68 and equally will you really want that bungee jumping potholing holiday when you are 68 if you have become infirm?
its all about balance and this is one question where you need to determine your financial expectations and then a qualified IFA such as myself or David can help you to plan to meet your objectives.
One thing is for sure, the sooner you start the earlier you will hit your goal.
| 12.31.10 @ 00:01