There are lots of things in life you can't control, but building your retirement savings doesn't have to be one of them. At Edward Jones, we partner with you to understand your retirement goals and help you create a personalized strategy to get there.
So what can you do today to strengthen your retirement savings plan? When it comes to retirement planning, three key factors determine how much you'll have saved and how much retirement income you can draw when you retire.
The three pillars of a retirement savings plan
- Time – how long you save
- Money – how much you save
- Return – how much your investments earn
You control time and money. And while you may think you have little control over your investment return, you actually control more than you think. You control how your money is invested and whether it's allocated to cash, fixed income or growth investments can significantly shape your long-term retirement income potential. Use our retirement savings calculator to see how a few adjustments to your retirement strategy can make a real difference over time.
The table below shows how small changes in each (or in all three) of these may help you better meet your goals.
How time, contributions and rate of return shape your retirement income
This chart demonstrates how time, monthly contributions and rate of return work together to grow your retirement savings. If you save $450 per month for 30 years and earn 6% per year, you'll have saved $450,000 which results in potential annual income of $18,000. However, when you save an extra five years, the portfolio value increases to $640,000 and the potential annual income increases to $25,600. When you save an extra $100 each month or earn an additional 1% each year, the portfolio value increases to $550,000 and the potential annual income increases to $22,000. If you do all three - save an extra five years, save an extra $100 each month, and earn an additional 1% each year - the portfolio value increases to $990,000 and the potential annual income increases to $39,600.
This chart demonstrates how time, monthly contributions and rate of return work together to grow your retirement savings. If you save $450 per month for 30 years and earn 6% per year, you'll have saved $450,000 which results in potential annual income of $18,000. However, when you save an extra five years, the portfolio value increases to $640,000 and the potential annual income increases to $25,600. When you save an extra $100 each month or earn an additional 1% each year, the portfolio value increases to $550,000 and the potential annual income increases to $22,000. If you do all three - save an extra five years, save an extra $100 each month, and earn an additional 1% each year - the portfolio value increases to $990,000 and the potential annual income increases to $39,600.
One simple way to incorporate investing into everyday life is through systematic investing. For example, by automatically investing a set amount of money each month into an individual retirement account at Edward Jones, you can help make sure you're putting as much money away as you can. This may help you reach retirement even sooner.
How we can help
If you want to see how some of these changes can impact the big picture and help better position you to reach your goals, just ask your Edward Jones financial advisor. You can review different scenarios together to see what makes the most sense for you. Even small changes, such as saving a bit more, can be beneficial over the long term.