At this stage of your life, your earning power is likely to keep increasing. As you look ahead to anticipated expenses in the coming years, saving for retirement may become a bit of a balancing act. Here are some ideas to consider:
1. Refine and expand your plan
- Review your retirement plan
- Make sure you are saving enough to retire when you want to
- Confirm that your investment and asset allocation strategy is aligned with your goals
- Protect yourself and your loved ones
- Check that the beneficiaries on your retirement accounts are up to date
- Make sure you create and update your will, general durable power of attorney, medical power of attorney, and living will
- Determine if you have the appropriate levels of life, homeowners, and other insurance to protect your family from the unexpected
- If changing jobs, manage your employer-sponsored retirement plan
- Be aware that taking cash out of your retirement plan can carry not only high taxes, but also early withdrawal penalties, and can significantly set back your retirement savings
- Explore options for savings you might still have in a previous employer’s retirement plan, such as rolling over into your current employer’s retirement plan or an IRA
2. Prioritize saving for retirement
- Take full advantage of the tax benefits your retirement plan offers
- If your employer matches your contributions, make sure you are contributing at least as much as your employer will match. Even better, contribute the plan’s maximum allowable amount.
- Also consider contributing to an IRA every year.
- Find out how long your savings will last and determine if you need to save more with our easy-to-use Retirement Quick View Calculator
- Consider putting part or all of any bonuses, tax refunds, or other lump sum payments into your retirement savings
- Don’t assume that your current retirement plan contributions are enough
- Depending on your retirement goals and how much you have already saved, you might need to be saving more than 10% of your income (possibly 15% to 20%) while in your 40s.
- Consider contributing to an IRA or Roth IRA as an additional way to meet your savings goals.
3. Protect your retirement savings from short-term needs
- Strengthen your emergency fund
- Consider increasing your emergency fund. You may want to set aside six months or more worth of your living expenses in a savings account in case you or your spouse loses a job.
- Don’t worry about funding it all at once — set a goal for yourself and work toward it over time.
- Tackle high interest debt
- Look for the lowest interest rates available and consolidate your debt. Pay off as much as you can each month.
Recordkeeping, trustee and/or custody services are provided by Wells Fargo Institutional Retirement and Trust, a business unit of Wells Fargo Bank, N.A. This information is for educational purposes only and does not constitute investment, financial, tax or legal advice. Please contact your investment, financial, tax or legal advisor regarding your specific needs and situation.