No matter how far off your goal is, one thing’s for sure, it will never get any closer until you start moving towards it. Saving for retirement’s the same way. You have to start picking up the pace now. Waiting even 5 years can have a big impact on your end result. The number one factor in your success is the amount you choose to contribute. You should aim to save at least 6% of your pre-tax salary. If that’s too much right now and you have many years until retirement, start lower and steadily increase it over time. And if your employer matches your contribution, be sure to contribute enough to get it all. It’s free money!
Little increases now can pay big dividends down the line. So let’s say you make $30,000 a year and contribute 2% of your salary to your retirement plan. If you increase your contribution by just 1% a year for 4 years, then your contribution will reach 6%. And when you retire after 30 years (assuming a 7% rate of return), your retirement plan assets could be doubled, which means you could have twice as much money each month in retirement.
So seeing these big results requires big sacrifices now -- right? Wrong. An extra $50 a paycheck now can mean an extra $1,200 a month in retirement.* And finding that extra money is easier than you think. You can cut out a latte today. Bring a lunch tomorrow. And each time you get a raise, increase your contributions. You probably won’t miss the money, but you’ll appreciate the difference it makes at retirement.
Well now you know that how much you contribute is the number one factor in your success, let’s get started. Increase your contribution rate online. Or call a retirement specialist.
Saving enough for retirement?
Find out with My Retirement Plan, an online tool that makes it easy to see if you are on track. After you answer a few questions, My Retirement Plan will calculate your retirement savings goal and recommend personalized next steps.
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*Assumes 38 years of saving, 7% average annual investment return, 20 years in retirement, a 50% employer match, and no increases in contribution amounts.
This information has been provided for illustration purposes only. Your rate of return will depend on many factors including market volatility.
This video has been prepared for informational purposes only and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. The accuracy and completeness of this information is not guaranteed and is subject to change. Since each investor’s situation is unique you need to review your specific investment objectives, risk tolerance and liquidity needs with your financial professional(s) before a suitable investment strategy can be selected. Also, since Wells Fargo Advisors does not provide tax or legal advice, investors need to consult with their own tax and legal advisors before taking any action that may have tax or legal consequences.
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Retirement Professionals are registered representatives of Wells Fargo Advisors, LLC. Wells Fargo Advisors is the trade name used by two separate registered broker-dealers: Wells Fargo Advisors, LLC and Wells Fargo Advisors Financial Network, LLC, Members SIPC, non-bank affiliates of Wells Fargo & Company. Discussions with Retirement Professionals may lead to a referral to Wells Fargo Advisors’ affiliates including Wells Fargo Bank, N.A. Wells Fargo Advisors and its associates may receive a financial or other benefit for this referral.