Money Management

Building a retirement fund gets more difficult the later you start. See what you can expect if you start saving for retirement after 30. 

Unless you started saving for retirement early in your career, typical retirement savings goals can be alarming. A popular Fidelity chart recommends having savings equal to your yearly income by age 30, twice your yearly income by 35, and three times that by 40.

It can definitely be stressful if you’re in your 30s and you haven’t saved for retirement yet. You might feel like you’re way behind and wonder if you’re going to be able to catch up to where you should be.

This is an extremely common worry, so you’re not alone. And while it’s good to recognize the importance of saving for retirement, it shouldn’t be a source of stress. To help you avoid that, let’s look at what to expect when you start saving for retirement after 30. We’ll also go over how you can save most effectively, plus some helpful advice from financial coach and blogger Chloe Daniels.

You still have plenty of time to save for retirement

First things first, it’s not a big deal to start saving for retirement after 30. Daniels, who writes the Clo Bare Money Coach blog, says that “A lot of people don’t start until their 30s, and if you plan on retiring in your 60s, you still have plenty of time to let compound interest do the heavy lifting.”

Not saving for retirement until your 30s is normal. Plenty of people in their 20s don’t have much disposable income to save for retirement in the first place. As you get older, income generally increases, so it’s easier to save.

As Daniels mentioned, you’re also not exactly short on time here. Depending on your exact age and when you want to retire, you could have 25 to 35 years or more to invest. Let’s split the difference and say you have 30 years until retirement. If you invest $500 per month and earn 8% per year on that, you’d retire with $745,179.72.

Focus on how much you can save starting now

Lots of people wish they had started saving for retirement at a younger age. But it doesn’t do you any good to dwell on that. Instead of feeling down about something you can’t change, focus on what you can do now to build your retirement savings.

If you haven’t started a retirement fund yet, open one. Daniels says that a workplace plan, such as a 401(k), is “often the easiest place to get started because it’s automatic, the money comes out before you ever have the chance to spend it, and contributions happen on a regular basis.” Individual retirement accounts (IRAs) are another good choice that you can use in addition to a workplace plan.

Once you have a retirement plan, make it a habit to contribute a portion of your income every month. A common option is to start by putting 10% of your income toward your retirement savings. Adjust that as needed to the amount that works best for you. If you have ample disposable income and you’d like to grow your retirement savings more quickly, you could opt for 15%, 20%, or more.

Invest so you can grow your money

Saving money for retirement is only half the battle. To get the most out of that money, you need to invest it.

Some people find investing intimidating, which is understandable. You’re putting your money on the line, and you certainly don’t want to lose it. Daniels advises that the key to getting over this is educating yourself on how investing works. She says that as you do that, “the fear and intimidation around investing will ease and eventually disappear altogether.”

Fortunately, there are more ways than ever to learn about investing. Daniels recommends looking for educational tools that fit how you like to learn. For example, if you’re a visual learner, you could check out investing videos on YouTube. If you’re an auditory learner, investing podcasts may work well for you.

You can invest money through your retirement accounts and any brokerage accounts you have with stock brokers. To do so, you choose investments you like and start putting your money in them. A few popular ways to invest for retirement include:

Target date fundsIndex fundsMutual funds

Even if you feel as if you’re late to the party on saving for retirement, remember that it’s better to start late than to not start at all. You’ll still be able to build a nest egg, and that will be a big help once you’re ready to retire.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy.

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If you were the victim of predatory second mortgage lending in the past, you may want to start paying attention. Find out why. 

A “zombie mortgage” is one that a borrower stopped making payments on, but on which no collection activity or effort has taken place for several years.

This is most common in situations where borrowers took out second mortgages, and because of the lack of activity and having reached some sort of resolution with their primary mortgage lender, the borrower believes the debt has been forgiven or otherwise satisfied in their loan modification. However, it has simply been sitting idle, and we’re starting to see a resurgence in collection efforts for some of this old second mortgage debt.

The zombie mortgage problem

According to Rohit Chopra, director of the Consumer Financial Protection Bureau (CFPB), we’re starting to see an increase in these so-called zombie mortgages.

One of the biggest culprits is the “piggyback” mortgage products many homeowners used in the years prior to the 2007–2008 financial crisis. If you’re not familiar, a piggyback mortgage is a type of second mortgage loan used to avoid making a down payment. For example, the borrower would get a mortgage for 80% of the purchase price (the primary mortgage), as well as a secondary “piggyback” loan for 20% of the price, effectively obtaining 100% financing. When borrowers were unable to make loan payments, we saw a wave of foreclosures and modifications of first mortgage loans.

Since these were second mortgages and so many homeowners were underwater at the time, meaning they owed more than the value of their homes, most lenders with second mortgages like these didn’t aggressively pursue them. Whether structured as piggyback mortgages or otherwise, second mortgage lenders are in a subordinate position to first mortgage lenders, making the probability that any meaningful recovery would take place very low.

So, instead of pursuing the borrowers, these second mortgages were typically sold to debt collectors for a small fraction of the amounts owed. And in many cases, they remain owned by debt collectors and have been sitting on their books ever since.

But now some of these debt collectors are making an appearance, especially in situations where the borrowers still own the home that the debt was used to purchase. They have started to get in contact with borrowers who have long since forgotten about these loans and assumed they were discharged in loan modifications. These collectors often demand full payment of the amount owed, plus interest and fees that are quite excessive.

What can you do?

If you hear from a collector about an old mortgage loan, there are a few tools to keep in your back pocket that can help you navigate the situation more easily.

Know your rights

First of all, know your legal rights in a situation like this. Lenders can’t foreclose on you after the statute of limitations in your state expires. This might require a bit of homework on your part, as foreclosure laws vary considerably by state, but it is six years in many cases.

Not only can statute of limitations be a valid defense in a foreclosure proceeding, but according to the CFPB, debt collectors that hold mortgage debt past the statute of limitations cannot start foreclosure proceedings, or even threaten to do so as a way to get you to pay. To do so could be a violation of the Fair Debt Collection Practices Act (FDCPA).

Furthermore, it’s important to note that delinquent debts over seven years old cannot be included on your credit report, and in most cases you cannot be personally sued for it.

Be proactive

As a final thought, if you could be in a position to have a zombie mortgage reappear, reading information like this is a great first step to educate yourself. Other smart ideas could include actively monitoring your credit reports, keeping an eye out for mail from debt collectors that you might assume is simply junk mail, and acting quickly by contacting a lawyer if a debt collector becomes aggressive or may be violating the law.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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If you have a bank account, lean on your bank’s mobile app. Find out how banking apps can help you stay on top of your financial matters. 

Many of us use mobile apps every day to accomplish tasks more efficiently. Did you know that most banks have mobile banking apps? They can make our lives easier and less stressful, and allow us to handle everyday banking needs from anywhere. The many features offered can help you take charge of your finances so you feel more at ease. Below are just six of the ways you can utilize banking apps to your advantage.

1. Deposit checks without visiting a bank branch

When life gets busy, it’s impossible to fit every essential errand into your schedule. Going to your local bank branch to deposit a check takes time and planning. Luckily, many mobile bank apps allow customers to deposit checks virtually. You can do so by taking a photo of the front and back of your check through your bank’s app. Talk about a stress-free solution!

2. Automate your savings

You’re not alone if you struggle to set aside money regularly in your savings account. You can simplify your life and eliminate forgetfulness by automating your savings through your mobile banking app. All you have to do is set up a recurring transfer from your checking account to your savings account and decide how often you want to transfer extra cash to savings. If you schedule transfers for payday, you won’t have a chance to spend the money you intended to save.

3. Avoid overspending with budgeting tools

Some banking apps also include budgeting features. Using one of these tools can be a helpful way to monitor your spending to avoid overspending. For many, this can be easier than tracking spending by pen and paper or a spreadsheet. If your banking app doesn’t have this feature, don’t fret. You can use one of the best budgeting apps instead.

4. Track your progress as you save for a goal

It’s common to experience bouts of lack of motivation while working on your savings goals. The good news is many banking apps include goal trackers. This feature can help you track your progress and stay motivated as you continue to save money. For many people, visualizing their progress is beneficial and allows them to feel more confident about reaching their goals.

5. Review your transactions to spot unusual activity

Using your mobile banking app lets you quickly and easily review your bank account balance and recent transactions without ever stepping foot in the bank — or even being near your computer. This way, you can spot unusual or suspicious activity sooner and report it to your bank immediately. Being able to monitor your bank account activity may help you feel less anxious about your money.

6. Pay bills without paying extra fees

Have you ever gone online to pay a bill through, say, your utility company’s website, only to realize that you’d be charged a fee to do so, regardless of your payment method? While a $1 or $2 fee may not seem like a lot, every extra charge adds up and impacts your personal finances. Luckily, there’s another option. Your mobile bank app likely has a bill pay tool, allowing you to schedule and pay bills through your checking account without paying fees. Easy and free is always a win!

Give your bank’s mobile app a try

You’re missing out if you’re not using your bank’s mobile app. These apps offer a convenient way to manage your finances. Check out our list of the best mobile banking apps to learn more.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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Ramit Sethi recommends avoiding one of the most popular types of investments. Find out why and see where he says you should invest your money. 

People often associate investing with picking stocks. After all, a lot of investing advice focuses on which companies to buy and how to build a good portfolio. You might assume that buying and selling individual stocks is the way to go.

Not so fast. Ramit Sethi, host of How to Get Rich on Netflix, recently shared his opinion that “In general, individual investors should AVOID individual stocks.” On his pyramid of investing options, he ranked individual stocks at the very bottom, along with individual bonds and cash.

It may go against the typical vision of investing. But for many investors, Sethi’s advice makes sense and is worth following.

Why individual stocks aren’t the best option for the typical investor

There are two reasons why Sethi puts individual stocks at the bottom of his investing pyramid:

They’re very inconvenient to choose and maintain.They have extremely unpredictable returns that often fail to beat the market.

Inconvenience is one of the big drawbacks of investing in individual stocks. Putting together a quality portfolio is hard work, and it’s time-consuming. For a properly diversified portfolio, it’s recommended that investors own at least 25 stocks across a variety of different industries.

One popular piece of advice is to invest in what you know, and that works, to an extent. But let’s say most of your knowledge lies in tech companies. If you only invest in those companies, your portfolio will be far too heavily weighted toward a single industry.

You’ll most likely need to spend quite a bit of time and energy researching companies to build a portfolio of individual stocks. After that, you’ll also need to keep up with how those companies are doing and decide when to make changes. It’s not impossible, especially since quality stock brokers have plenty of research available for clients, but there are much easier options.

Where to invest your money instead

Sethi recommends that instead of picking individual stocks, investors put their money in index funds or target-date funds. These are funds that invest your money for you, which means there’s much less work and time required on your part. Both are great options, so here’s more on how each of them work.

Index funds

An index fund is an investment fund designed to track the performance of a market index. For example, an S&P 500 index fund will mimic the performance of the S&P 500, a stock market index made up of 500 of the largest publicly traded companies on U.S. exchanges.

Here are the main benefits of investing in index funds:

They have very low fees.They’re diversified since they contain a large number of stocks.Many of them have historically earned competitive returns. For example, the S&P 500 has an average return of about 10% per year.

Target-date funds

A target-date fund is like a retirement plan in a single investment fund. Each one has a specific retirement year, and the fund’s investing strategy is based on that year. For example, if you choose a 2055 target-date fund, its asset allocation will be optimized toward retiring in 2055. This makes them as convenient as it gets. However, you also have the least amount of control with this type of investment. That’s why some investors prefer other options, such as index funds.

Deciding how you want to invest

Sethi says that by sticking to investment funds, you can focus on how to grow the amount you invest, instead of which stocks to pick. That’s definitely a big advantage of index funds and target-date funds.

This doesn’t mean every investor should avoid picking stocks. Some people want to have full control over their portfolios. There are also those who enjoy learning about companies and choosing individual stocks themselves.

If that sounds like you, then you may want to split the difference. Put most of your money in index funds or a target-date fund, but also reserve anywhere from about 5% to 20% of your money for stock picking. This way, you get the excitement of picking stocks when you want it, but you still have most of your money in a more reliable and convenient option.

Our best stock brokers

We pored over the data and user reviews to find the select rare picks that landed a spot on our list of the best stock brokers. Some of these best-in-class picks pack in valuable perks, including $0 stock and ETF commissions. Get started and review our best stock brokers.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Lyle Daly has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Netflix and Target. The Motley Fool has a disclosure policy.

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