4th Quarter 2019

Saving Forward: 5 Things to Know About Saving for Retirement

5 Things to Know About Saving for RetirementYou may wonder why you should start thinking about retirement when you’re young. But setting aside even a small amount of money in your tax-advantaged retirement plan now can build a significant nest egg over time.

  1. If you start saving $150 bi-weekly when you’re age 25 and your investments earn 7% per year, you’ll have $804,472 by age 65. If you don’t start saving until age 35, you’ll have just $380,649. Use the “Grow Your Savings” calculator at www.icmarc.org/grow to compare different scenarios.
  2. Pre-tax 457 contributions won’t reduce your take-home pay as much as you might think. If you’re in the 22% federal tax bracket, contributing $500 per month reduces your take-home pay by only $390. Use the Paycheck Calculator at www.icmarc.org/rsb to run your numbers.
  3. When you’re young, you typically have more time to ride the stock market’s ups and downs. See Investing Spotlight for more information about creating a diversified portfolio based on your time frame.
  4. You can withdraw money from the 457 plan without penalty at any age when you leave your job; you don’t have to wait until age 59½ if you stop working for that employer earlier. Withdrawals from pre-tax 457 plans, however, will be subject to income taxes at any age.
  5. ICMA-RC’s videos and calculators can help with your retirement-savings questions. See www.icmarc.org/education.

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