Retirement saving TIPs for all ages
It's never too early - or late - to consider your retirement. A few adjustments now, may significantly impact the outcome of your retirement plans. Here are some age-based tips when determining how much to save & plan for your future retirement...
20’s –
Time is on your side - Retirement may seem like a long way off. But that’s just the point; you have a long time before retirement. The sooner you begin to build your retirement savings the longer your money has to grow and to take advantage of the wonderful benefits of compounding.
Consider setting your 401(k) or other employer retirement plan contribution to at least 5 - 10% of your gross income, beginning with your first job. At minimum, contributing an amount equal to any employer match is generally a good idea. That’s free money!
If you’re employer doesn’t offer a retirement plan, consider an IRA or better yet a Roth IRA.
30’s -
Time is still your ally, so resist the temptation to cut back on saving for retirement. Instead, you might look to gradually increase it. Make it a priority, even as you save for other goals, such as a house, new car, travel, or your kids’ college education.
Track you spending; if needed find ways to cut back on expenses, avoid short-term debt, and gradually increase your savings.
Invest your retirement savings for growth – at this young age you can likely withstand the ups and downs of the market, so don’t be afraid to invest 100% in a diversified portfolio of stocks.
Spend less than you earn and put the excess, including bonuses or raises, towards saving for retirement or other goals. Consider setting up an automatic monthly transfer to your savings account to help you save - remember, you can always adjust the amount.
Put any bonuses or raises you get into your long-term savings, resisting the temptation to blindly increase your lifestyle.
40’s –
Now is likely the time to max out your retirement savings – contribute the maximum-allowed to your 401(k) or other employer retirement plan.
While contributing to your 401(k), consider the benefits of also contributing to a Health Savings Account (HSA), or traditional or Roth IRA.
If you’ve changed jobs, you may find you have old 401k accounts laying around. Consider rolling over old plans to new ones, IRAs, or Roth IRAs. Simplify your life, where it makes sense to. You’ve got enough to worry about.
Spend less than you earn and put the excess, including bonuses or raises, into your savings; for both retirement and your other goals.
If you haven’t already, now is the time to get intentional with your money. Know how much you’re spending and saving, and why.
50 and older -
Take advantage of “catch-up” contributions to your retirement accounts. For higher income earners, you may find you need to be saving beyond your 401k plan.
If your employer offers a deferred compensation plan, now may be a good time to learn more. Be sure to structure your payouts in line with your goals and in a tax-efficient manner.
Reevaluating your investment strategy – consider your current investment strategy. How much risk are you taking? When is the right time for you to decrease your exposure to stocks? While stocks often offer the greatest potential for growth, they may also have greater risks. Reducing the amount of stock in your investments may reduce the overall growth of your investments, but it may also reduce the impact of the next bear market.
If you haven’t already, now is the time to get serious about retirement planning. Estimate your living expenses and health care costs, and consider the impacts of inflation and market uncertainty. You might find a few adjustments now can greatly impact your plan.
Before you pull the plug, be sure you have enough to live confidently in retirement. Often, based on how you want to invest during retirement (i.e., your investment strategy) and your retirement goals.
Retirement is a process and not just an event at a single point in time. Preparing for and transitioning into retirement is a journey. Here are the main components we see - click here to see our one-page Retirement Journey.
Keep in mind, no matter what your age, your employer retirement savings plan can be a key component of your overall financial strategy. Don’t have an employer plan, consider funding an IRA, HSA, and/or other tax efficient vehicle.
Learn more about how we can help you confidently invest towards retirement.