How I Saved $149,000 for Retirement by 30

Hello! Here is a guest post from a reader of mine, Alberto. Alberto is sharing his story on how he saved $149,000 for retirement by the age of 30. Enjoy! Sometimes I can’t believe I actually saved that much for retirement before I even hit my 30s.  It’s surreal to me thinking how far I’ve…

Michelle Schroeder-Gardner

Last Updated: May 26, 2023

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Hello! Here is a guest post from a reader of mine, Alberto. Alberto is sharing his story on how he saved $149,000 for retirement by the age of 30. Enjoy!

Sometimes I can’t believe I actually saved that much for retirement before I even hit my 30s.  It’s surreal to me thinking how far I’ve come in building my net worth. 

What’s even crazier is I didn’t even have a full time salaried job until two and half years after I graduated!

Even when I did get a job, I didn’t know the first thing about 401k plans nor did I even give retirement a second thought.  I was just relieved to have a job!

It’s hard to imagine without any context going from a measly $9,215 in Roth IRA savings from my parents making me save a few bucks over the years from birthday or Christmas money, to at 30 having a total of $149,000 in a span of 7 years. 

But trust me, if I can do it, so can you. 

Related content:

How to save for retirement in your 20s


Take an interest in your future self

There’s no better way to prepare for your life than picturing yourself at an older age.  Once I graduated college, I realized there would be no more second chances, no more getting away without studying and still acing life. 

I had no job lined up and struggled to get a full-time job for over two years.  At first, I wanted a career in sports, whether it was working in the front office of Major League Soccer or doing live statistical analyses for professional Mexican soccer league games. 

All I could manage was an internship and a part-time job respectively.  And on Sundays I had a sweet job working home games for the New York Giants, when they were relevant, once upon a time.

But the struggle was real.

It got to the point where I realized it didn’t matter what job I got, I just needed a job that paid and gave me benefits.  So, I ended up with a job at ADP in their insurance agency, whatever.

From there is where the ball begins to start rolling.  I began to think about my future self and realized I had a lot to learn if I wanted to have a lot of money for retirement. I went all in figuring out how to put myself in the best position possible.


Look where you can cut costs

When I started out, I was only making $35,000.  So even the tiniest amount saved made a difference for me.  I began observing my daily spending habits to see where I could cut costs. 

Now full disclosure, I was fortunate enough to live at home with my parents rent free, so while I had a full-time job from the end of 2014 until I moved out in late 2016, I was able to take advantage of saving my income. 

I realize this is not a possibility for most people, but keep in mind I live in the Greater New York City Area, so the cost of living is much higher than most, even if it’s just to hang out with friends on the weekend or to buy lunch or coffee.  And I also went two and a half years without a full-time job, so there’s that.

But anyway, this is when I began to cut back.  I realized I was buying lunch every day and buying a coffee at Dunkin’ Donuts in the morning and afternoon, each day.  I was able to save over $3,000 by making my own coffee and bringing my own lunch to work. While that may not seem like a lot, it was 8.5% of my gross income at the time.


Can you contribute to an IRA and a 401k?

I had heard about 401k plans, but I had no idea what they were even for.  I just started a real job; I could barely even file my own taxes!

I didn’t know anything about them.  I had no idea there were contribution limits, that you could control how much you wanted to contribute and sometimes even pick the plan yourself. 

Once I realized this was actually a thing, I went all-in learning as much as I could.  The real motivator for me was seeing how much I hated my job.  I figured if I wanted to ever retire with a lot of money at some point, the best way was going to be learning anything and everything I could about retirement plans and investing.  I just had to be patient with myself since I literally knew nothing.

While I was studying for my insurance licenses, I even remember trying to learn the basics of compound interest.  I remember I watched this video thinking, “man, this is too much how do I even apply this to the real world.”

But I told myself just to be patient with it, because in the end if I can learn this, it’ll be worth it.

And so from there, I also learned I could contribute to an IRA plan on top of my 401k plan.  For me, this seemed too good to be true.  I maxed out my Roth IRA plan each year while I lived at home, and was able to max out my Roth 401k plan in 2016. 


Importance of starting 401k early

When I first began taking an interest in learning about retirement plans, the most common topic I read was how much of a difference compound interest makes when you have time on your side.  I had no idea. 

And it’s difficult for us to even comprehend, because people think linearly, not exponentially.  It’s why you can’t possibly imagine turning $10,000 into $51 million.

But it’s true.  Even if you start investing at 25 and end at 35, you’ll have more than someone who begins at 35 and continues to invest for 30 years. 


Why participate in a 401k plan?

The reality is, pension plans are becoming a thing of the past.  Gone are the days where you began a job as an apprenticeship and worked your way to a senior role over 40 years with a nice fat pension. 

Even when I started my current job 4 years ago at a different insurance broker, we had a pension, but then just 9 months later, it was cancelled, so I was excluded from it.

Now, your 401k plan is your retirement plan.  Originally it was devised as a savings plan to complement your pension plan.  But now it’s all we have left.  This is your retirement plan.  It’s difficult to prioritize planning for retirement in your 20s and 30s, but the reality is, the sooner you begin contributing to your 401k plan, the easier saving will be. 

It’s even better if you make automatic contributions.  Soon enough, you won’t even notice you’re making the sacrifice for your later years.  If you can, try to increase your contribution a percentage point each year, especially if you get a pay raise or a promotion with an increased salary.


Challenge yourself to understand the details of retirement plans

This is so important, a super critical concept I want to get across.  You 100% need to know the finer details of your retirement plans.  The differences can cost you dearly. 

A study was done showing more than 70% of people don’t realize they’re paying fees in their 401k plan.  If you’re not careful, you can end up paying up to as much as 2% in fees.  While that may not seem like a lot, it could cost you more than $1 million over a career.

I learned a few things about my retirement plan.  I found out that not only do I have a 401k plan, I have an option of participating in a Roth 401k plan, as does my fiancé at her pharmacy job.  In my first job, I was so confused what after-tax dollars and before-tax dollars meant.  I don’t know why, but I just was. 

A Roth IRA or Roth 401k is different than a traditional IRA or 401k in that the money that goes into a Roth plan is taxed first before it goes into your account.  On the other hand, a traditional plan does not tax your money until you’re retired.  When you’re in retirement, the money in your traditional 401k plan will be taxed then when you want to withdraw the money.

For pretty much everyone, and me, a Roth plan is the way to go if it’s available.  If you think the money you’ll be spending in retirement will be a greater amount than what you’re making now, you will want to be taxed on the smaller amount upfront today.  It will save you a lot of money.  Most likely your spending income will be more in retirement than it is now since every day is basically a Saturday when you’re retired.

I also learned I can choose the specific investments I want to participate in among the options provided to me.

These include target date funds, index funds, mutual funds, etc.  I invest 100% in an S&P 500 index fund for my 401k.

The last thing I needed to learn about was the matching plan.  This is what your company will “match” against how much you contribute to your 401k plan.  For me, I am fortunate to have 4% automatically contributed to my plan regardless of what I contributed, along with 50% matching up to 6%.  That’s basically a confusing way of saying the company will give me 3% of my salary towards my Roth 401k plan if I put up 6%.

Because I learned all of this, I am able to contribute $8,450 annually.  I was also able to set up my fiancé’s plan to be maxed out ($19,500 in 2020) in a Roth 401k plan.  So now annually we have $27,450 tax-free money going into an S&P 500 index fund, soon to be $27,950 in 2020.

Sure, it can be boring, dry stuff to learn about, but you’ll be happy you did your homework like I am.


Should I reinvest dividends in an IRA? Should I reinvest dividends in a 401k?

This is a common question asked and an important notion to learn.  I really didn’t see the point at first.  I wanted to get my money upfront in cash because I thought it was cool to see how much money I got each year from essentially doing “nothing”.  It was only like $50 but hey, it seemed cool to me.

But in actuality, taking your dividends in cash and not reinvesting them is the worst thing you can do.  When people talk about the average market performance being 10%, they don’t realize 3% of that is from dividends being reinvested.

Even from 1993-2017, the average annual return was 7.7%, but with dividends it was 9.7%, a 2% difference.  Really, that is 25.97% greater of a performance with dividends reinvested. 

That’s huge.

Here’s another hypothetical.  This is the data I used to enter in the dividend reinvestment calculator below.  Dividends are reinvested starting at 25 years old, not paid out until the age of 65.  This is based off my $65,000 salary, contributing $8,450 (13%) a year with average growth rates of an S&P 500 index fund for dividends, dividend yield, etc. with a $0 initial investment.

Look at the tremendous impact it has:

It’s worth noting this is also assuming I never receive a promotion or pay increase ever again.  Not too bad!  Now I know you’ll need to live off more than $23,794.79 in 2059, but it’s just to give you an idea how impactful dividend reinvestment is.  Also on the far right is the buying power in today’s numbers, which is nice, because most sites don’t give you that figure.  It turns out $13 million isn’t what it used to be.

Also as a side note, make sure if you have a brokerage account, you check off to reinvest dividends if it’s not already automatic.  The default on my Schwab account was to not reinvest dividends, which is not cool.


Use a brokerage account in addition to an IRA and a 401k for retirement funds

So the way it works is, you have a 401k plan and an IRA plan strictly for retirement.  But I thought, why stop there?  Who’s to say I can’t save more elsewhere?  I don’t just want to set aside $6,000 in my Roth IRA account if I can do more elsewhere too.

So instead I use my brokerage account to supplement it.  I put short-term investments in what’s called a money market fund, which is basically a mutual fund that invests in short-term debt securities like US Treasury bills.  I use this to save for my wedding and any other future costs like saving for a house.   

The rest I invest on my own in individual companies if I choose.  But that’s for later in the post. 


Learn the benefit of an S&P 500 index fund

I admit I was very skeptical.  I didn’t really know what it was, why this S&P 500 index was the best mutual fund to choose, etc.  But as I did research, I gradually understood when people say “the market did this” or “the market did that” they’re talking about the S&P 500.  That might seem obvious for some but I had no idea!

And the reason is because this list of 500 companies is most representative of how the United States’ economy is performing.  I don’t know what the metrics are that make these companies a part of it, all I know is that’s what it represents.

So then I learned why index funds are so great.  And it’s because they’re cheap.  They’re cheap because they aren’t actively managed like traditional mutual funds are.  There are thousands of index funds to choose from, but from what I’ve learned and what Warren Buffett and pretty much every else recommends is if you don’t want to learn anymore about investing than you have to, put your money in an S&P 500 index fund.  With an average performance of about 10%, it’s the safest bet to ensure you’ll have a happy retirement if you start early enough. 


Run simulations to see how powerful compound interest is

I do this constantly to see how much of a difference a percentage point or even a tenth of a percent makes.  Whenever I get frustrated at work and don’t want to save as much as I am, I always either use a calculator for dividend reinvestment or this calculator for a basic compound interest calculation.

It’s just for fun, but it really helps me stay the course and put things in perspective.  These tools help me realize the more patient and long-term minded I stay, the better off I am.  Especially after using the dividend reinvestment calculator where it shows you the total year by year, you really start to see how much money you make in your later years.

This is the way to go if you want your retirement to be stress free.


Train yourself to manage your emotions

This was by far the toughest thing for me to conquer.  I’ll admit it took me probably four years to really get over.  I didn’t honestly trust the process until I went through it myself. 

My example was when I began investing in Apple back in the middle of 2015.  Before I really knew what I was doing, I invested in Apple literally at the peak price before the stock went down.  But luckily, this was when I began educating myself through a list of books and podcasts I refer to later on in the post. 

I knew emotions were always what got the best of people, but it’s easier said than done regulating your own! At first I was nervous because I wasn’t 100% sure what I was doing.  And it was pretty unfortunate because from May 2015 – May 2016 the price dropped 30%.

I doubted myself.  It was awful.  But instead of selling out, I kept reading as much as I could.  I invested a little here and there throughout the months. 

On top of that, I began following my investment every single day and read market news on my investment every single day.

Now I know that’s contrary to what experts say you should do.  But I wasn’t doing it to find the sweet spot to get out of the market.  I was learning how people overreact to good and bad news.  I was training myself to ignore the news, only look at the numbers and facts. 

It took a few years to overcome and tons of reading and research on my part, but I was able to overcome it and I’m for the better because of it.

Now to date instead of losing 30%, I’m up 118% since that miserable year.  It wasn’t some crazy strategy.  It was simply because I finally trained myself to keep my head and stay the course. 

If I can do it, so can you if you want to branch out and invest in companies, not just index funds.  If you do, then keep reading.


Learn what to look for in individual companies to invest

Now if you’re really looking to do a little more than invest in an S&P 500 index fund, you need to be prepared to do a ton of reading and research.  And I don’t mean watching Jim Cramer on Mad Money or something ridiculous like that.

You need to be a voracious reader.  I read at least 2 hours a day.  And it’s not just on investing.  You need to have a thorough view of how economies, businesses, human psychology, etc. work and what makes companies succeed and fail.

I’ve read investing books sure, but I also read biographies, psychology books, business books on how/why companies succeed/fail.  But, I do it because I enjoy it, if you don’t want to, then stick to index funds and you’ll be fine.

I know it sounds cliché, but I’ve learned what to look for in companies from Warren Buffett and Charlie Munger.  If you read the books related to them below and listen to the podcasts, you’ll be in great shape.

A few things I’ve learned to research are:

  • Financials of the company and its competitors
  • Dividend history, preferably 10 years of increased dividends
  • Look for any unfair competitive advantages
  • Executive compensation and how much the CEO is paid relative to other executives
  • P/E ratio industry average compared to the company you’re interested in
  • Price to book value ratio
  • Return on equity relative to the industry average
  • Cash flow
  • Working capital

These are all things I learned from reading books and listening to podcasts.  If you want to learn more, go for it, I started from knowing absolutely nothing.  I’m in great shape for my financial future now because of all the resources I’ve used. 

And that leads me to the following…


Create mentors through books and podcasts

For me personally, I’m unable to get the mentors I’m really looking for in my job at work.  It’s just not going to happen and I’ve accepted that. 

Instead what I’ve learned is, people suggest creating your own mentors or people who you’d want to mentor you through books about them, books they’ve written or podcasts.

Because I’m so interested in investing and learning about technology trends, as corny as it sounds, I’ve learned as much as I can from Warren Buffett, Charlie Munger, Steve Jobs, etc.

And it’s obviously not because I want to be like them, that’s impossible.  I just want to learn as much as I can from them so I can understand how to invest in great companies and how technology and software is eating the world.

If you can’t personally meet your mentors, learn from them through other means! I’ve found it to be extremely helpful to read and listen to podcasts.

Which brings me to my next point.


Read and listen to podcasts every day

Piggybacking of my previous point, this is where the learning really happens.  Every day I read the Wall Street Journal on my iPhone and whatever book I have on me at the time during my commute. 

Then when I’m walking from the subway to work or from the subway to my apartment, I listen to podcast episodes.  You won’t believe how much you can learn after a few years.  I read on average about 26 books a year now, it’s crazy, I could hardly even finish The Great Gatsby in high school.

But make sure you read books that will challenge you, books that you will learn from.  A lot of books are a bunch of fluff with nothing of real value that I see people read all the time.  It does no good for you, you waste time not learning real valuable skills.

Here are some books and podcasts I recommend:





Steps you can take to prepare for retirement

Okay so that was a lot of information to soak up all at once.  Instead of creating a generic summary, here are actionable steps you can take to improve your financial situation:

  • Check if your company offers a 401K plan
  • If it does, see if there is a Roth option
  • Check if there is a matching plan
  • At the very minimum, contribute your salary up to the matching plan, it’s free money
  • If you can, max out your contribution to $19,500 for 2020
  • See if you can choose your investments in the 401k, and put it all in an S&P 500 index fund
  • Open an IRA/Roth IRA with a brokerage firm
  • Supplement the IRA with a brokerage account
  • Read the Wall Street Journal or The New York Times and a book every day, even if just for 5 minutes, create the habit
  • Use the resources I provided if you’re so inclined

Good job! I know that’s a ton of information, but it always annoys me when I see “financial advisors” not giving this advice to people because it’s not in the advisor’s or the firm’s best interest.

Everyone should be allowed to put him or herself in the best financial position possible for retirement, so I wanted to share what I’ve learned over the past few years.  I hope this helped. 

If anyone has any questions, let me know!

My journey so far:

BIO:  Alberto is a regular casualty insurance broker in New York City with an average salary and an above average retirement savings.  He is the founder of Appetite for Investing and he plans to retire in his 40s with his fiancé using his and his fiance’s retirement contributions and savings to help get them there.  He also plans on retiring someplace not so expensive.

Are you currently saving for retirement? Why or why not?

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Michelle Schroeder-Gardner

Author: Michelle Schroeder-Gardner

Hey! I’m Michelle Schroeder-Gardner and I am the founder of Making Sense of Cents. I’m passionate about all things personal finance, side hustles, making extra money, and online businesses. I have been featured in major publications such as Forbes, CNBC, Time, and Business Insider. Learn more here.

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  1. I did just what you recommend, maxed out the 401K, plus a Roth, plus put a lot in a brokerage account, plus had a big emergency fund. And long before retiring early I had more money than I’ll ever be able to spend. What you do early and often is the key, good post! The guidelines I’ve seen say you should have half your annual income saved for retirement by age 30, sounds like you are well ahead of that!

    1. Thanks so much I’m glad you liked it!

    2. So I’m over 35 and what would be your advice for me?
      When I started working at 18 I started saving into a RRSP( Canadian version of 401k) and I guess I didn’t take it too seriously cuz I don’t have anywhere near 100k.
      Since 2009 we have been living on one income since I care for my kids, and we just do the minimum amounts to keep the accounts going.
      So I do feel like I’m not doing enough for myself since I don’t get a Canadian pension when I retire.

      1. Hey Lisa! That’s okay don’t worry you still have years ahead of you. If it makes you feel any better my job had a pension plan when I first got there, which was one of the reasons why I took the job, and 6 months after being there, they took it away and I wasn’t eligible since I wasn’t there long enough, so you definitely can make it without one.

        If I were you, I would first check to see if there is a matching plan from your employer. For example, for me, my employer automatically contributes 4% of my salary irrespective of what I put in and also contributes an additional 50% up to a 6% contribution from me. So in total, 13% of my salary goes to my Roth 401k. So if you can, at the very least, you should contribute up to the matching plan if available, because that is free money the company is giving you. The maximum contribution limit by the employer is $19,000 in the U.S., but I can only contribute $8,450, so don’t feel bad if you can’t contribute the maximum. I see the maximum for an RRSP in 2020 is 18% of your 2019 salary up to a maximum of $27,230, and I would never be able to contribute that much, so you’re in good company.

        The next thing I would do is take a look at how that money is being invested. I don’t know what type of options you have available in Canada, but if there’s an S&P 500 index fund option or something similar, try to choose that. One reason being the fees will be extremely low in comparision to other options since it is not actively managed. A lot of people don’t realize they pay fees on their 401k plans and it can cost them dearly. The other reason is since you’re so young, you don’t want to have your money invested in bonds unless the interest rate is above the average of what the market produces over the long-term. Right now it looks like the Canada interest rate is 1.75% which is terrible, you’ll make hardly anything. If you have an S&P 500 index fund option or something similar, you would have made about 28% on your savings. When you’re young you don’t have to worry about the short-term implications and when you’re at retirement age, the hope is you’ll have enough money so as to not even be worried about the short-term and you can keep your money out of bonds.

        There’s no rush so don’t stress it. If you have any other questions let me know.

        1. Sorry, I meant $19,500, I was thinking of 2019 limits my bad!

        2. I meant $19,500, I was thinking of 2019 limits my bad!

  2. Saving money is always a good thing, especially when you’re striving to avoid working a regular job for the rest of your life.

  3. Theresa of Fueled By Wanderlust

    Super insightful article! Although I started working full time at age 23, and have been contributing to a 401k ever since, I never gave much thought to investing until recently. I have to admit, I feel behind, but am glad to finally be digging in to all of this. This article helped me get an idea of different types of investments I should be paying attention to!!

    1. Awesome, I’m so glad!

  4. I’m in my late thirties and started planning late in my life. The advice here is spot on with other advice I have received from family, friends and professionals. What I came here to say is thank you for linking the podcasts: I’m always looking for a way to better my strategy and a curated podcast can fit into almost any moment in the day. Is there one you recommend to start with for someone who is pretty new to financial planning?