Saving for the future is easier than you might think.
Have you reviewed your retirement goals lately? Or are you still trying to figure out where to start? Retirement might be around the corner or several years away. But the truth is, the future will happen, so it’s good to be prepared. We get it, saving for the future can feel overwhelming when you’re focused on today’s financial priorities. So, we want to help break it down and show you how saving early, even a small amount, can make a difference in your future.
If you’re already saving for your retirement today, that’s great! Have you thought about whether you can afford to save a little more? It might not seem like it, but even saving extra pocket change can turn into a nice savings foundation.
Awesome, right? Imagine what saving a dollar per day could amount to, or even 5 dollars.
Did you know?
You may need to save at least 10 percent of your pay, plus any employer contributions, during your career2 which is estimated to replace about 85 percent of your pre-retirement income3. Depending on what you want retirement to look like, you may need to save a bit more. Once you know your goals for the future, it can be easier to know how much you need to save, and what you need to do to get there. Take a look through these savings tips (PDF) to help you with your goals.
Just remember, starting your retirement savings foundation today can lead to a more secure financial future. Curious to know where you stand? Start by checking out your Retirement Wellness Score at principal.com.
1 For illustrative purposes only. Based on a $40,000 salary with bi-weekly pay periods, 3.5 percent annual salary growth rate, 25 percent tax rate and 7 percent annual rate of return. Reduction in bi-weekly take-home pay is accurate for first year only. The assumed rates of return and salary growth in this example are hypothetical and do not guarantee any future returns nor represent the returns of any particular investment. Amounts shown do not reflect the impact of taxes on pre-tax distributions. Individual taxpayer circumstances may vary.
2 Based on analysis conducted by the Principal Financial Group®, October 2015. The estimate assumes a 40-year span of accumulating savings and the following facts: retirement at age 65; a combined individual and plan sponsor contribution of 12 percent; Social Security providing 40 percent replacement of income; 7 percent annual rate of return; 2.5 percent annual inflation; and 3.5 percent annual wage growth over 40 years in the workforce. This estimate is based on a goal of replacing about 85 percent of salary. The assumed rate of return for the analysis is hypothetical and does not guarantee any future returns nor represent the return of any particular investment. Contributions do not take into account the impact of taxes on pre-tax distributions. Individual results will vary. Participants should regularly review their savings progress and post-retirement needs.
3 Assuming pre-retirement annual gross income of $40,000. AON Consulting’s 2008 Replacement Ratio StudyTM http://www.aon.com/about-aon/intellectual-capital/attachments/human-capital-consulting/RRStudy070308.pdf.
The Retirement Wellness Planner information and Retirement Wellness Score are limited only to the inputs and other financial assumptions and is not intended to be a financial plan or investment advice from any company of the Principal Financial Group® or plan sponsor. This calculator only provides education which may be helpful in making personal financial decisions. Responsibility for those decisions is assumed by the participant, not the plan sponsor and not Principal®. Individual results will vary. Participants should regularly review their savings progress and post-retirement needs.