For many in their 30s, retirement likely still feels far off. But it’s a crucial decade to start—or continue—saving for retirement, because investors reap significant benefits when they have a long timeline.

The longer one’s time horizon, the more investors can take advantage of benefits like compound interest—earning interest on interest, which can help savings grow exponentially over time—and the ability to make more aggressive investments early on that could garner greater returns.

“The key is planning very early,” says Eddie Lopez, a Titan analyst specializing in retirement, who recalls a former colleague’s saying: “Financial planning is just bringing the future to the present.”

That’s why starting to save for retirement in your 20s can be ideal. Experts say people should have saved at least the equivalent of a year’s salary for retirement by age 30.

The median retirement savings for millennials was $68,000 in 2020, according to Transamerica’s annual retirement survey released in 2021. The study warned that millennials “will rely on self-funded savings more than their predecessors,” noting that “many entered the workforce around the time of the Great Recession with higher levels of student debt than previous generations. Additionally, they may end up caring for their baby boomer parents, and most millennials worry there will be no Social Security when they retire.

So investing in your 30s is important, especially if you haven’t started saving yet. Whether you’re looking to start saving for retirement at 30 or ramp up the funds you started in your 20s, here are five things to consider as you prepare for retirement.

1. Can you increase your 401(k) contributions? 

“Retirement involves three buckets,” or different types of retirement plans, says Lopez. “The first one is pretax, where the government gives you a tax break now and you only pay tax later, when you withdraw.” 

The government created these tax-advantaged accounts to encourage people to save for their retirement. Perhaps the most well-known account in this bucket is the 401(k), a retirement savings account sponsored by many employers that offers a range of investment options including mutual funds, exchange-traded funds (ETFs), stocks, and bonds. The annual 401(k) contribution limit for people in their 30s is $20,500 for 2022.

These 401(k) contributions are made with pretax dollars, typically deferred straight from one’s paycheck and deposited in a retirement account automatically. 401(k) plans lower investors’ taxable income now—and offers the advantage of funds compounding over the decades before retirement. Investors don’t pay any tax on 401(k) funds until they are withdrawn, at which point they’re considered ordinary income.

Some employers also match their employees’ contributions up to a certain percentage, which is effectively free money. Whether or not an employer offers a match, increasing 401(k) contributions is a way for investors in their 30s to shore up a small retirement fund or accelerate their existing one.

2. Can you open a Roth IRA? 

“The second retirement vehicle bucket is ‘tax-free’: Investors pay income tax on money when they contribute it, but withdrawals in retirement are tax free,” Lopez explains.

This category of tax-advantaged accounts includes the Roth IRA, which works the opposite of a traditional 401(k) in terms of its tax approach. When investors withdraw their money in retirement, they won’t pay taxes on that amount—and that includes any gains earned. Those withdrawals can be made without penalties when the account holder is at least 59 ½ and has had the account for at least five years. 

Note that Roth IRAs have income limits for account holders—meaning not everyone can contribute to one. For 2022, single taxpayers with an adjusted gross income of less than $129,000 can contribute a max of $6,000, according to IRS rules. Married couples filing jointly and making $204,000 or less can contribute a max of $12,000.

Those contribution maximums apply to the total of all investments made in a Roth IRA as well as another type: the traditional IRA, a tax-deferred retirement account. With a traditional IRA, contributions are made pretax—like a 401(k)—and they let some investors reduce their taxable income by fully or partially deducting the amount invested when they file their federal tax returns for that year. The amount an investor can deduct from their taxable income depends on a few factors, including participation in a workplace retirement plan. 

3. Can you put more in the stock market?

“The third bucket is the taxable funds, which is your brokerage account,” Lopez says.

Investing in stocks may result in gains, especially over the long term, and investors can opt to open accounts through a brokerage and make their own investments—or leave it to a professional investment team or robo-advisor. Beyond stocks, these investments may include mutual funds, exchange-traded funds, bonds, and more.

Results of any investment are never guaranteed, but informed moves may help investors generate passive income and stay ahead of inflation. The average stock market return was 13.9% annually during the last 10 years, while annual inflation rates have been between 1% and 3%.

Investment approaches vary based on individuals’ goals for retirement, time horizon, interests, risk tolerance, etc.—but for investors in their 30s, an investment advisor may recommend a more aggressive strategy compared to someone older. That’s because, while these investments may reap larger returns and outperform in the long run, they can be more volatile in the short term.

4. Do you need to pay off debt?

Yes, we’re talking about retirement, but savings and debt go hand in hand. As Lopez puts it: “You want to earn interest, not pay interest.”

Investors in their 30s who may still be paying off student loans, or carrying auto loans and credit-card debt, getting rid of those ongoing costs can reduce the amount of money spent on interest and free up money to put toward retirement savings. As a rule of thumb, the Consumer Financial Protection Bureau recommends keeping monthly debt payments to a max of 43% of gross income.

5. Can you adjust your budget to avoid lifestyle creep?

This is a time when many people move up in their careers, scoring bigger salaries and bonuses. But those bigger paychecks may come with more expenses: a first or larger house, kids, cars, and more. It’s easy to overspend without realizing it, or to lose focus on retirement when saving for nearer-term goals like a home or college. 

Investors may want to keep closer tabs on their monthly and annual budgets. A financial advisor can also help assess the big picture.

The bottom line

The 30s are an important decade for growing retirement savings, because when it comes to retirement, the longer the time horizon, the more time savings have to grow. Investors can save for retirement by considering tax-advantaged accounts like a 401(k) and Roth IRA, as well as investing in stocks and other securities. To ensure retirement savings stay on track, consider paying off debts and assessing your budget as your lifestyle evolves.