Personal Finance

I'm 35 with $75k saved in my 401(k) - what other steps can I take to get ahead financially?

Christy Bieber

Published: January 20, 2025 12:22 pm

A Reddit poster got a late start on his 401(k) contributions and is concerned that he has just $75K saved at age 35.

He’s currently making $130K per year, saving 12% of his income, earning an employer match equal to 4% of his salary, and wants to know what he should do going forward.

So, what steps can he take to make sure he’s on track for a secure retirement?

If you get a late start on savings, you’ll have to invest more for the future

The Redditor is right to be concerned that he’s a little behind on retirement investing. By 35, most experts recommend that you have at least one year’s worth of your salary saved and ideally 1.5 year’s worth. That would mean the poster should have a minimum of $130K saved and ideally closer to $195,000 and he has less than half that amount.

The good news is, while he started a bit later than the ideal age, he’s saving a good portion of his income and should be able to catch up by the time he reaches retirement age.  If he continues saving 12% of his income, keeps earning his 4% match, gets a 2% annual raise, and earns 7% average annual returns, his nest egg will be worth $3,584,914 by the age of 67. 

His final income, assuming those 2% raises, would end up being $244,990 at that age. Since experts recommend saving 10 times your final salary, that would mean he’d need $2.45 million and he’d have well above this amount. 

The reason he’ll be able to catch up and exceed the recommendation is because he’s saving so much. With a 12% contribution rate plus a 4% match, he’s saving 16% of his income.  If you’re going to start late and want a secure retirement, investing a lot is crucial for success. 

How can the Reddit user stay on track for retirement savings?

While 35 is later than ideal to start saving for retirement, the Redditor is now doing everything right by contributing to his 401(k) and earning his full match. He’ll just need to stay the course — unless he decides he wants to pursue early retirement in which case he might need to step up his savings rate and be a little more aggressive.

Whatever he decides, the keys to achieving his goal of a secure retirement should involve:

• Investing a generous portion of his income. Since he’s investing in a 401(k), this money comes automatically out of his paycheck. That’s a good thing since automatic contributions maximize the chances of achieving your goals as you don’t have to force yourself to transfer money to savings each month.
• Invest for the long-term. The Redditor can maximize his chances of achieving his savings goals by making reasonably safe investments and keeping his money invested for the long term. An S&P 500 index fund is usually a good bet for most investors as it provides exposure to around 500 large U.S. companies. That offers good diversification with limited risk. 
• Maintain the right asset allocation. The Redditor should invest in a mix of stocks and bonds, with his asset allocation determined by his age. To determine how much to put in the market, he can subtract his age from 110 or he can talk to a financial advisor to create a personalized asset allocation plan.

The Redditor may also want to look into putting some of his money into a traditional or Roth IRA after earning his full employer match in his 401(k), rather than just funneling all of his funds into his workplace account. Roth IRAs can provide diversification in when you get your tax breaks, while traditional IRAs can offer a broader choice of assets to invest in.

Since the Redditor has a large income and can invest a good portion of his money, talking to a financial advisor to decide how best to use it may be the best way to make sure he ends up a rich retiree.