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If you're in your 30s, you've still got a great opportunity to prepare for a comfortable retirement. You're still young enough that time has a few decades to work its compounding magic on the money you invest. In addition, you've also likely established yourself well enough in your career to be able to command a salary that covers more than just the bare minimums of survival.

That's a combination you can use to your advantage to potentially retire as a millionaire -- or even better.

You don't even need Warren Buffett-like investing skills to get there, just the patience, discipline, and consistency to keep to a plan. These four tips will start you on the right path toward assuring your golden years are truly golden.

Tip 1: Make it a priority. If you start in your 20s, it's almost freakishly easy to design a retirement plan that, if you consistently execute it, gives you a strong chance of getting you to retirement with a seven-figure nest egg. If you're starting in your 30s, you still have a great shot of retiring a millionaire, but you'll either have to sock more away or earn better returns to get there.

The table below has details on what your potential future looks like, assuming you'll be saving for around 30 years until you retire:

Monthly Investment 10% Annual Returns 8% Annual Returns 6% Annual Returns 4% Annual Returns
$2,000 $4,520,976 $2,980,719 $2,009,030 $1,388,099
$1,500 $3,390,732 $2,235,539 $1,506,773 $1,041,074
$1,000 $2,260,488 $1,490,359 $1,004,515 $694,049
$500 $1,130,244 $745,180 $502,258 $347,025
$250 $565,122 $372,590 $251,129 $173,512
$100 $226,049 $149,036 $100,452 $69,405
Note: data from author's calculations.

The S&P 500 (^GSPC) has returned on average around 10 percent per year, including dividend reinvestment, over the long haul. While there are no guarantees in the market, notice how you still wind up a millionaire if you sock away $2,000 every month and only earn 4 percent over those 30 years.

With a diversified stock/bond portfolio, chances are reasonable that your total returns will likely fall somewhere in that table, showcasing just how important it is to start now and make it a priority.

Tip 2: Put your retirement ahead of your kids' college. A huge part of parenting is making sacrifices for your children's well-being and their futures. When it comes to the choice between funding your retirement and funding their college educations, though, the answer is simple: Don't put a dime toward their educations until you've got a plan in place that adequately funds your retirement.


In reality, there are a number of methods aside from writing a check that can be used to pay for college, including scholarships, loans, grants, and summer and campus jobs. On the flip side, nobody will loan you money to cover your retirement -- with the possible exception of a very expensive reverse mortgage on your house. On top of that, Social Security, the government's safety net for retirees, is on track to run out of cash and slash its benefits by about 25 percent within the next 20 years.

If you want to think of it in terms of helping your kids, consider this: If your retirement is covered, you won't be a financial burden on them as they're working hard to raise their own kids. Also, by the time your kids reach college age, should you find you're ahead of schedule on saving for your retirement, you can always divert some of your retirement money to help their educations.

Tip 3: Maximize the 'free money' you get. If your job offers you matching funds for contributing to your 401(k), 403(b) or other retirement plan, contribute at least as much as you have to in order to get the most from your match. Even if your plan's options and costs aren't the greatest, the match is extra money that can help overcome the drag from an otherwise less-than-ideal plan.

Additionally, all qualified retirement plans, including an IRA as well as a 401(k) or 403(b), come with tax benefits attached. They'll all let you defer taxes on gains and income in the plan until retirement. Traditional plans typically also offer a tax deduction for contributing, and Roth-style plans allow for completely tax-free qualifying withdrawals for retirees. Those tax benefits can help your money go further by reducing the friction costs you'd otherwise face while trying to build your nest egg.

Tip 4: Don't be afraid of stocks. It may seem like it's not a good time to invest in the stock market. However, it almost never looks like a great time to invest.

The reality is that if you're in your 30s, you still have decades of time to let compounding and the smoothing effects of dollar-cost averaging work their combined magic. There are no guarantees in the market, of course, but once you get your plan in motion, you'll be amazed at how much better off you'll be than had you never started in the first place.

Get started now
In your 30s, time still works in your favor when it comes to preparing for your retirement. But to keep time as your ally, you need to put a plan into action sooner rather than later. By following the four tips outlined above, you can put yourself on a track to make your golden years truly golden.

Motley Fool contributor Chuck Saletta has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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raginnftmfs

I've heard people say before save for retirement first. It's not easy to let your children garner huge amounts of student loans, but that may be the only way for them to go to college. Though you do also have the option of 529 plans. It's all up to each person/family. If you do decide to pursue stocks as part of your retirement plan, take at a look at http://www.mutualfundstore.com/investment-planning/about-shares-stock-companies-market-cap. Just remember, all investments do have some chance of risks.

April 24 2014 at 12:26 AM Report abuse rate up rate down Reply
Vera Chang

1) Don't be foolish and fall into the trap of trying to measure your wealth by the value of your assets. Markets change. Valuations fluctuate. Instead, measure your wealth by the amount of cash flow your assets consistently generate.
2) Pay off your debts as fast as you possibly can. If this means living in a crappy studio apartment and eating ramen everyday for a couple of years, do it. If you want to buy a car, get a reliable beater. Get insurance for $25/month from Insurance Panda. Forget about buying a house until your debts are paid off.
3) Once you are out of debt, stay out of debt. The only exception to this rule is a vehicle and a house. If you want to get a nicer car, buy used and be able to pay it off in a year or 2.
4) If you are going to stay in the same spot for at least 10 years, buy a house, preferably with at least a little bit of usable land. An acre is good, 5 acres is better. Take the amount you are pre-approved for and cut it in half - that's how much you should spend on a house. Come to the table with at least 20% down and make a couple of extra mortgage payments every year. If you're going to be transferred or relocate every 5 years, forget about buying a house and rent instead.
5) Develop multiple revenue streams. Do contract work. Start a business on the side. Invest in a business as a silent partner. Raise chickens, breed dogs or grow apples. Build websites. Buy and sell antiques. Acquire rental property. Sell something that generates residual income. Learn to play the currency markets or trade stocks. Do whatever you can to generate income from multiple sources.
6) Grow these multiple revenue streams to the point that they generate enough consistent and reliable cash flow to replace your current income.
7) Make as much as you can. Save as much as you can. Give away as much as you can.
8) Retire!- the sooner, the better. Be sure you understand that "retirement" doesn't necessarily mean you stop working, it just means having the freedom to do what you want to do, when you want to do it.

April 12 2014 at 2:15 PM Report abuse rate up rate down Reply
Thomas Rockford

I'm lucky enough to work for a company that pays a 4% match with a 5% contribution, but I can understand how frustrating these cuts are. My company recently made drastic cuts to our pension program. Luckily I had not worked here long enough to have depended upon the pension but it made me decide to consider other ways to make sure I had enough money for retirement. If anyone is interested this is what I decided to do, and let me know your thoughts...
I'm saving a good amount of money in cash and CDs I bought at my chase account. I don't trust the stock market for retirement income.
After researching other investments I thought life insurance might be wise, and found a really competitively priced one at LifeAnt ($1.5 million whole life policy for just $80/month) and I think whole life insurance might be smarter than an annuity because I need the coverage
I'm working to open a small business on the side that is not going to take a lot of startup capital because you can't have too many sources of income, and I can then move any income into my other savings.
No matter what you cant trust the government or your company to be there for you anymore, you have to take matters into your own hands.

February 15 2014 at 5:40 PM Report abuse +1 rate up rate down Reply
w_diago

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December 02 2013 at 3:36 PM Report abuse rate up rate down Reply
Jasmine Eva

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September 10 2013 at 12:12 PM Report abuse rate up rate down Reply
papadon.don

good advice... especially putting savings AHEAD of kid's college.
It's long past time for these lazy M-Gens to get a job. Mom & Pop will be paying through the nose for many yrs or come....even IF they get a degree.

September 10 2013 at 11:23 AM Report abuse rate up rate down Reply
toosmart4u

You still have social security and medicare to rely on. Do not believe the lies coming from the GOP. They want to end these 2 fine programs. Now when Bush Jr. was pres. he took out 300 billion to 500 billion a year for his last 6 years in office. He replaced the money with treasury notes. Now social security has to cash some in to make monthly payments. The GOP is on record not wanting to cash them in for they say they could use the money on better projects. The democrats are the only one that will save your social security.

September 10 2013 at 11:21 AM Report abuse rate up rate down Reply
1 reply to toosmart4u's comment
papadon.don

What bull!!.... if u think u can rely on SS and Medicare ALONE... then u r naive, my friend. Both Parties are guilty of raiding SS.

September 10 2013 at 11:28 AM Report abuse rate up rate down Reply
Mark Sneed

One option that is often overlooked is an annuity plan. Sure, they aren't for everyone, but they can do wonders for the right crowd. If you're curious about exploring other options for your retirement, check out http://annuityguys.com.

September 10 2013 at 10:41 AM Report abuse rate up rate down Reply
nsoccio

Thats all great if you started in the 70's. Where in hell are you going to get 5% & 10% returnss with out a lotta risk, in todays world.

September 10 2013 at 9:38 AM Report abuse +1 rate up rate down Reply
1 reply to nsoccio's comment
vlady1000

True the returns have been dropping over the decades. I remember in the late 70's they said if young and stay in equities, project using 12% avg return, now they say use 8%. In another 30 years will it be 4%? I diversified about 13 years ago into student rentals because I saw this starting to happen. Best thing I ever did as I can now retire off the rentals alone in 2 more years.. With today's low rates the ROI is about 16-22% (on the 25% down payment) from the positive cash flow alone, about 30-40% if you include principle reductions on the loan and a modest 2% appreciation rate. My daughter (age 29) max's out her 401K (100% match), etc but also bought a rental this year and is looking to get in on a 2% ownership of a Surgical Center. My point is, do not just think of Wall Street, there are other (and usually better) ways to help create your retirement income.

September 10 2013 at 11:35 PM Report abuse rate up rate down Reply
dodie1990

Saving and investing is a good idea, but what about the governmment who will try to tax it all away, or have so much unflation that the money is worthless when you retire? A million dollars in thirty years may not ve enough to retire on. Today, 1 million will allow you about 40,000 per year, hardly a luxurious retirement.

September 10 2013 at 8:58 AM Report abuse rate up rate down Reply
1 reply to dodie1990's comment
papadon.don

dodie... the govt will NOT tax your retirement income significantly if ya do IRA'S and ROTH. I have FAR less than $1mill .... so combined with SS, I live like a king!!

September 10 2013 at 11:32 AM Report abuse rate up rate down Reply