Retirement Savings Stage 2: 35 - 50 Years Old

Doesn’t it amaze you how fast life goes by?  Once you’re in this stage of pre-retirement, you’re likely zeroed in on your “career job” and starting to earn some significant money.  You’re also likely to be married and have a family (although retirement planning should take place regardless of your marital status or family situation).   Along with these exciting life stages, chances are that you are under as much debt as you ever will be, you’re busier than you can imagine – both with work and with shuttling the family to sports, music, and every other event under the sun – and you sometimes think you don’t have time to concentrate on anything!

Fortunately, during this stage of your life your responsibility toward your retirement preparation is pretty simple.  Save consistently, and increase your savings every chance you get.  Here are a few ways to increase your savings during this stage of life:

  1. When you pay off your student loans:  When you get the letter from your student loan servicer that your debt is paid – celebrate!  Go out to dinner (of course pay cash, not via a credit card!).  Then, the next morning, arrange to increase your retirement savings by at least half the amount you’ve been paying on your student loans.  (According to the Department of Education, the average student loan payment is around $280 per month. Take half of that amount and go to the financial calculators under the resources tab in this website and play around with how much that might be worth in 20-30 years!)

  2. When you get a tax refund:   Save ⅓ of any tax refunds into a Roth IRA.  The IRS website says the average tax refund is $3,120.  If you saved $1,000 of that each year for 20 or 30 years it would also add a nice amount to your nest egg and, if it’s in a Roth IRA, you won’t have to pay tax on the withdrawals you make in retirement (Roth vs Traditional is the topic of an upcoming blog post).

  3. Windfalls:  During this stage of your life you may encounter an unexpected windfall – from an inheritance, from a bonus, or from another unexpected source.  Follow the same procedure as in number 2 – save ⅓.  (I know a lot of financial experts would say save it all, but my experience says you’re much more likely to successfully save ⅓.  I think the rest should be dedicated to debt (⅓) and emergency fund (⅓).)

  4. Increase your 401k or retirement contribution 1% per year until you’re at 10% or more.  By increasing it a little bit each year, you can significantly increase your overall retirement nest egg without “breaking the bank” any given year.

  5. Second Income:If your personal circumstances will bear it, try starting a side business or, if one of you stayed home while the kids were young, perhaps you can return to the workforce at least part time.  Dedicate ½ the earnings from the second income to retirement. (½ can go to debt reduction or anything else you want if you are debt free).

During this stage of life, just be aware of the importance of retirement savings and keep making small, steady increases.  You’ll be very happy with the end result if you have been consistent!  If you have any questions about this blog or about your retirement, feel free to contact me at


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