Hope Is Not A Strategy
Are You Saving Enough In Your Employer’s Retirement Plan?
If you’re already contributing to your employer’s retirement plan, you’ve made a smart choice and may be well on your way to a comfortable future. However, most people who are saving for retirement aren’t sure they’re saving enough.1 They’re hoping so.
Do The Math
To figure out if you’re saving enough, first you need to know how much you’ll need. Experts say you’ll need about 80%2 of your current income each year to maintain a similar standard of living. Plus, with healthier lifestyles these days, many retirees can expect to live up to 30 years in retirement.
So, How Much Should You Save?
The short answer is — as much as you can! No matter how you add it up, retirement won’t be cheap and you’ll be the one paying for it.
If you have 10 or more years before retirement, using the 80% rule of thumb is probably appropriate. However, if you’re within five to seven years of retirement, you’ll want to develop a more specific plan for retirement. Start with these ideas.
- MAKE IT A PRIORITY: You have a lot of expenses competing for your income. This will be the same in retirement, but without the steady paycheck. The more you save now, the easier it will be to cover those expenses. Find ways to make saving for your future a priority. Financial planners estimate that the average household wastes 10 to 15% each month. By realistically figuring out where your money is going today, you’ll likely find places to stop spending and put it toward your retirement.
- GIVE YOURSELF A NUDGE: Try increasing your contribution by one or two percent every year. Making that little nudge over time can have a powerful impact on your savings. You’ll see immediate small impacts in current tax savings and it’s less painful on your bottom line each month.
- MATCH THE MATCH: If your employer offers to match your contributions up to a certain point, take advantage of it. It’s almost like getting free money and is one of the easiest ways to help fund your retirement.
1 Source: Employee Benefits Research Institute (EBRI) 2012. 70% of workers are not sure they’re saving enough to fund their retirement.
2 Source: American Society of Pension Actuaries
This material is provided with permission from American Century. It is for informational purposes only and has been obtained from sources believed to be reliable. While every effort is made to ensure the accuracy of its contents, it should not be relied upon as being tax, legal, or financial advice.
American Century Investment Services, Inc., Distributor
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