Photo of women talking about ways to save for retirement.

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.

SaverJess
Age of first retirement savings25
Yearly investment$10,000
Investment length15 years
Total invested$150,000
Total value at age 671$1,238,017
SaverJen
Age of first retirement savings35
Yearly investment$10,000
Investment length30 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:

EmployeeJess
Salary$50,000
% saved by employee 6%
Match3%
Total yearly retirement savings$4,500
EmployeeJen
Salary$50,000
% saved by employee 3%
Match1.5%
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:

AgeSalary2 Retirement savings %Total yearly retirement contributionIncome 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.

Age5055
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.

Assume 6% rate of return.

The subject matter in this communication is educational only and provided with the understanding that Principal® is not rendering legal, accounting, investment or tax advice. You should consult with appropriate counsel, financial professionals, and other advisors on all matters pertaining to legal, tax, investment or accounting obligations and requirements.

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