You can't win a race, let alone cross the finish line, by standing on the sidelines. Likewise, when preparing for a secure financial future, it's critical to get involved and make the most of your retirement savings options.
This hypothetical example is for illustrative purposes only and does not represent any actual investment performance, price or yield. This illustration assumes a beginning balance of $30,000 and assumes no increase in earnings and has an annual rate of return of 6%. Investment returns are not guaranteed, and your actual return may vary significantly from that shown.
Last year, the Employee Benefit Research Institute's 2016 Retirement Confidence Survey showed that the percentage of workers surveyed who felt very confident they have enough money saved for a comfortable retirement leveled off at 21% in 2016 after increasing from 13% in 2013 to 22% in 2015.* If you're part of the other 79% and need to increase your savings, or even if you are among the 21% who are very confident, there are specific things you can do to address your long-term savings goals.
PICK UP YOUR PACE
If you selected a percentage of your salary to contribute to your company's retirement plan when you first started working, and haven't adjusted it since, you should consider increasing your contribution rate by just a percentage point or two, which can make a significant difference over time without putting too much of a dent in your day-to-day finances.
Take a look at the following example: Sue is 40 years old and earns $40,000 a year. Currently, she contributes 3% of her annual salary to her company-sponsored retirement plan and has $30,000 saved. If she stays on this path, she will accumulate $196,714 by the time she turns 65. Look at how much the value of her savings will grow if she increases her contribution rate by one, two or three percentage points!
GET A BOOST
Even the best runners benefit from help along the way. Likewise, if your company-sponsored retirement plan offers an "employer match," take full advantage of it. This generally means that an employer will match a certain percentage of your contribution, up to a specific level of your salary—for example, 50% of your contributions up to 6% of your annual pay. This extra money is like getting a raise as an incentive to save for retirement—so don't pass up the offer.
COUNT ON YOUR TEAM
Just as professional runners have coaches to help them succeed, you have the resources we offer to help you achieve your retirement objectives, such as informative articles about retirement and our retirement calculators.
*EBRI Retirement Confidence Survey March 2016 Issue Brief #422.