4 retirement savings strategies that can work
Whether or not you have a retirement plan through work, you can take steps to start saving or save more—no matter how close you may be to those non-working years. Use these four ideas to pick a retirement savings strategy that can work for you.
Start early, even with a little.
They say it’s time, not timing, that matters when it comes to retirement savings. An early start on saving can even make up for saving for less time. Here’s why.
| Saver | Jess | |
|---|---|---|
| Age of first retirement savings | 25 | |
| Yearly investment | $10,000 | |
| Investment length | 15 years | |
| Total invested | $150,000 | |
| Total value at age 671 | $1,238,017 | |
| Saver | Jen | |
|---|---|---|
| Age of first retirement savings | 35 | |
| Yearly investment | $10,000 | |
| Investment length | 30 years | |
| Total invested | $300,000 | |
| Total value at age 671 | $840,000 | |
Get the match if you can.
Everyone loves free stuff. If you’re lucky enough to work in a place with an employer-sponsored plan that offers a match, save enough to get that maximum match. It’s essentially free money. A few examples:
| Employee | Jess | |
|---|---|---|
| Salary | $50,000 | |
| % saved by employee | 6% | |
| Match | 3% | |
| Total yearly retirement savings | $4,500 | |
| Employee | Jen | |
|---|---|---|
| Salary | $50,000 | |
| % saved by employee | 3% | |
| Match | 1.5% | |
| Total yearly retirement savings | $2,250 | |
Regularly increase what you save.
There are a range of recommendations for what percent of your income you should save for the future. And you’ll have competing goals such as student loans, saving for a home, and big vacations, so how much you’re able to save might change from year to year.
One way build your savings without feeling overwhelmed is to increase your contributions over time. Add a small percent—say just 1%—every year, until you get to where you want to be. Here’s how that could work:
| Age | Salary2 | Retirement savings % | Total yearly retirement contribution | Income after retirement contribution3 |
|---|---|---|---|---|
| 30 | Salary2 $30,000 | Retirement savings % 4% | Total yearly retirement contribution $1,200 | Income after retirement contribution3 $28,800 |
| 31 | Salary2 $30,900 | Retirement savings % 5% | Total yearly retirement contribution $1,545 | Income after retirement contribution3 $30,745 |
| 32 | Salary2 $31,827 | Retirement savings % 6% | Total yearly retirement contribution $1,910 | Income after retirement contribution3 $29,917 |
| 33 | Salary2 $32,781 | Retirement savings % 7% | Total yearly retirement contribution $2,295 | Income after retirement contribution3 $30,486 |
| 34 | Salary2 $33,764 | Retirement savings % 8% | Total yearly retirement contribution $2,701 | Income after retirement contribution3 $31,063 |
| 35 | Salary2 $34,777 | Retirement savings % 9% | Total yearly retirement contribution $3,129 | Income after retirement contribution3 $31,648 |
| 36 | Salary2 $35,820 | Retirement savings % 10% | Total yearly retirement contribution $3,582 | Income after retirement contribution3 $32,238 |
| 37 | Salary2 $36,894 | Retirement savings % 11% | Total yearly retirement contribution $4,058 | Income after retirement contribution3 $32,836 |
| 38 | Salary2 $38,001 | Retirement savings % 12% | Total yearly retirement contribution $4,560 | Income after retirement contribution3 $33,441 |
| 39 | Salary2 $39,141 | Retirement savings % 13% | Total yearly retirement contribution $5,088 | Income after retirement contribution3 $34,053 |
| 40 | Salary2 $40,315 | Retirement savings % 14% | Total yearly retirement contribution $5,644 | Income after retirement contribution3 $34,671 |
| 41 | Salary2 $41,524 | Retirement savings % 15% | Total yearly retirement contribution $6,229 | Income after retirement contribution3 $35,295 |
| Total saved | Retirement savings % | Total yearly retirement contribution $41,941 | Income after retirement contribution3 | |
Keep moving forward.
Plans and goals change. Life throws unexpected curveballs. The important thing is to try to save consistently, over time—even if the total changes. If you need to use them, tools like catch-up contributions can help.
| Age | 50 | 55 |
|---|---|---|
| Catch-up contribution | $6,500/year | $6,500/year |
| Value at age 674 | $246,079 | $147,143 |
What to do next?
- Check in with your retirement savings annually or as significant events occur to keep information up to date and check on your progress. Use this list to get started.
- Not sure how much you should be saving for retirement? Our retirement wellness planner can help you assess what you’ve got saved and what you may need to save.
Chart 1
The chart is for illustrative purposes only. The total value at age 67 (potential future value) assumes a 6% annual rate of return on savings. The assumed rate of return in this chart is hypothetical and does not guarantee any future returns nor represent the returns of any particular investment. Amounts do not reflect the impact of taxes on pre-tax distributions. Individual taxpayer circumstances may vary.
1 Assuming 7% rate of return.
Time + compounding = potential for greater growth
Chart 2
For illustrative purposes only.
Chart 3
For illustrative purposes only.
2 Assuming 3% yearly raise.
3 Does not reflect federal or state tax or other payroll deductions.
Chart 4
The chart is for illustrative purposes only. The total value is a potential future value. The assumed rate of return in this chart is hypothetical and does not guarantee any future returns nor represent the returns of any particular investment. Amounts do not reflect the impact of taxes on pre-tax distributions. Individual taxpayer circumstances may vary.
4 Assume 6% rate of return.
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