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When Should I Start Saving for Retirement?

If retirement is still a long way off, time is on your side. Not only does starting early give you more time to save, it also increases the power of compounding (generating earnings from previous earnings).

So how much difference does a few years really make?

Take the example below, noticing the difference in what you would have saved by age 65 depending on when you began investing. Saving the exact same amount each month, you could be looking at over $300,000 more for retirement if you had started five years earlier (age 30 versus 35).


Simple ways to start saving

Even if you don't think you'll be able to put much away for retirement, there are some simple ways to start saving.
  • Pay Yourself First – Savings should be part of your monthly expenses, not just the leftovers. A simple way to do this is to automatically invest a portion (even if it is only a small amount at first) of your paycheck. In many cases, you can set up a direct transfer from your employer or from your bank into a retirement account.
  • Your Employer Can Help – Many companies match retirement plan contributions, such as 50% of your contributions up to 6% of your salary. You should take full advantage of this, as it could increase your ending retirement balance by 50%, assuming these matching levels. At least contribute enough to earn the full employer match – don’t leave “free money” on the table.

It's never too late

If you are closer to retirement, remember it's never too late to start thinking about your future. Now is the time to get specific about your desired lifestyle, spending and sources of income in retirement.

  • Ensure Your Investments Align with Your Goals – You may want to invest aggressively to “make up for lost time,” but this could actually increase the risk that you won’t reach your goals. Talk to your financial advisor about how much risk you should be taking, based on when you plan to retire and how much you'll need.
  • Determine Your Flexibility – You might be surprised where you’re spending your money and may have more flexibility than you think. Taking your lunch, saving your raises and reducing discretionary expenses are some ways to increase savings.
  • Take Advantage of Catch-up Provisions – Once you reach age 50, you can contribute more to your retirement accounts, like your 401(k) and Individual Retirement Account (IRA).

How we can help

No matter where you are on the road to retirement, your financial advisor can help you find ways to get you where you want to be. Contact him or her today.

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