5 Things 30-Year-Olds Don’t Have Enough Of

by Jeff Rose on 1 March 2013 15 comments
Photo: Mr.Thomas

As humans, we tend to set up milestones for ourselves. It's fairly common to take stock at the end of each decade of life, and figure out what we need to do differently. One of those major milestones seems to be the age 30.

At age 30, you are assumed to be moving forward with life. You're firmly in the adult world, but you might still be making the mistakes of post-adolescence. Chances are that you're looking around at age 30, and wondering why you aren't in a better position. If you are 30, or about to turn 30, consider that you probably don't have enough of the following. (See also: 5 Expenses to Ditch After Age 30)

1. Retirement Savings

It's hard to think that you need to worry about retirement when it's 25 to 30 years away. However, now is the time to be setting aside money. The longer you let compound interest do its thing, the more money you will have later. And that's important.

A recent survey conducted by LearnVest and Chase Blueprint found that the median amount of money that those ages 25-32 have saved for retirement is $12,000. That's not a whole lot to go on. You aren't going to reach your retirement goals if you are only setting aside $100 a month. You probably need to ramp up your retirement savings if you expect to enjoy your golden years in comfort.

2. Emergency Savings

A large number of Americans are without emergency savings, and 30-year-olds are likely to be in that group. According to a recent Bankrate Financial Security Index survey, 28% of Americans have no emergency savings at all. An additional 21% of Americans have some savings, but less than three months' worth. When you total that up, it's clear that 49% of Americans don't even have enough emergency savings to last three months. Only 25% of respondents say that they have at least six months' savings.

Chances are that you fall into the "not enough emergency" savings group — and it's probably time to ramp it up so that you are prepared for what could be next.

3. Life Insurance

Is your family adequately protected in the event of your death? Life insurance is an important part of financial planning. Unfortunately, many 30-year-olds don't have life insurance, and, if they do, they don't have enough of it.

According to J.D. Power & Associates, 40% of adult Americans have no life insurance at all. On top of that, 25% of those who had spouses that died between the ages of 30 and 55 felt that there wasn't enough coverage. When you think about it that way, it becomes clear that you need life insurance.

If you care about your family, you should consider boosting your life insurance coverage. Term life is very affordable; you can get a large amount of coverage for a fairly low premium.

4. Income Diversity

While it's nice to have a good job with great benefits, it's important not to become too dependent on one source of income. In the current economy, you never know when layoffs will strike. As a result, it's important to be ready with diverse income streams. A good emergency fund can help shield you, but it's also a good idea to look for ways to build your assets.

You can start a side hustle, monetize a website, get involved in selling items and crafts on eBay, Craigslist, and Etsy, build a dividend portfolio, or engage in a creative endeavor that brings royalties. While you don't need to try to replace your day job, you can reduce your reliance on a single source of income (your day job) for your financial wellbeing.

5. Long-Term Financial Planning

At 30, you probably don't realize how important a long-term financial plan is. In fact, you probably don't have nearly enough financial planning under your belt. Your complete financial plan should include a look at major milestones, from buying a house (if you decide to go that route) to having kids to sending those kids to college to retirement.

You should have a long-term financial roadmap that can get you to where you want to be. You can sit down with your life partner and work this out, or you can go to a trusted financial adviser to get help. But you need to make a plan. You should figure out what you need to do to create the lifestyle you want now and for the future.

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Guest's picture

I know all the arguments for planning ahead, but to be honest it's really off-putting. It's sad when you've only started living and that's hard enough, but you have to start thinking about old-age and death. However, what needs to be done needs to be done.

Guest's picture
Nick

It is kind of a morbid thought, but at least as technology advances, I'm hoping retirement will have more to offer by the time I get to that age. Although I think most of us expect to be working after the current retirement age.

Guest's picture

Being 30 is definitely an exciting yet stressful time in your life. You are in between that stage of having the cushion you had in your 20s and the possibility of falling flat on your face now that life is up to you. All of these things are necessary and it's a shame more people don't realize that and start planning for later in life as soon as they can.

Guest's picture
Guest

I love how #5 assumes that, although buying a house may be an option, having children is a given. In my case, I bought a house, but have no plans or desire to have children. I just had to point this out; otherwise, great article!

Guest's picture
Guest

You don't need life insurance if you don't have dependents. If the sudden, let alone permanent, loss of your income would leave your spouse in a serious lurch, then that counts too. I have enough assets to cover the costs of burial if need be.

Guest's picture

I definitely agree with the items on the list. My husband and I do not have any of them until we reached 40. Though we have our 401 contribution from our previous employers, we know that would not be enough for our retirement. We were glad we were able to develop various sources of income , which allowed us to increase our savings and investments.

Guest's picture

1&2 can be wrapped up in two words "Savings rate." Start saving at least 20% of your income and the emergency fund and retirement savings take care of themselves.

I'm not certain that all 30-somethings need life insurance. I would limit this only to those with dependents. And I would be suspicious of an study saying that we need more life insurance put out by a company that sells life insurance. Conflict of interest maybe?

I would agree with the lack of income diversity and recommend that everyone consider building a solid portfolio of dividend growth stocks. Which is made vastly easier if you take my first point to heart.

Guest's picture
Guest

How about number 6 : time (!) - people in their 30s are crushed by pressures on the job, their children, their aged parents.

Guest's picture
MidSouth Mouth

I would add 1) Make your cultural capital explicit to yourself and 2) Build social ties outside the so-called nuclear family or your own dwelling unit. These will sustain you even when the other sources seem tapped out.

Guest's picture

At 30 you have come to a time in your life when you should be completely financially independent and you are controlling all of your own assets, you should be at the age to where you can save responsibly and not touch certain accounts. Its upsetting to hear that 28% of Americans have no savings accounts at all, I'm only 21 and I have had my savings account since I was 12!

Guest's picture

At age 30, you most probably have a grip of many things in life, but 30 is only 30. There are still things to learn and get adjusted to. Starting to plan when your in your mid 20's doesn't seem like such a bad idea. All in all, it's better to start planning earlier than later!

Guest's picture
Guest

As someone who graduated at 17, had a partial scholarship for college at 18 & got married the same years, paying for my remaining college, Its extremely difficult!!

Unlike most 30 year olds, I'm 34 & have had 16 years of marriage&kids,
8 being in my current career. I have 20,000 in retirement, a ton of debt but over
600,000 in life insurance. No savings.

Its great to say all of this but not everyone was
supported by mommy & daddy till they got out of school.

Guest's picture
Guest

There are plenty of people who have all of these things and were not supported by mommy and daddy. It is difficult but it can be done.

Guest's picture
Guest

I, too, had a partial scholarship. I was married and had a child before age 20. I finished college with no financial support from my parents and am now 34, still married and have two kids. We have no debt other than our mortgage, which has only $95K left for a 5-bedroom house. We have $65k in retirement, $250k in life insurance.

What I never understand is how people get so much debt from college loans and don't have a career to show for it. What were you thinking?

Guest's picture

Great article in terms of items to think about. If people of ANY age ratchet down consumption and see money in terms of freedom, they can becoming financially independent at a much earlier age. And then decide whether to retire, work, or do anything they want. I'm pretty aggressive in my savings rate--it's been almost 50% for a couple years now. I hope to retire by 50. It could have been earlier, but I made poor decisions in my 20s.