Give Your Retirement Savings a Boost

When was the last time you checked on how much you were saving each year in your workplace retirement plan?

If you don't remember or haven't adjusted your contributions since you were hired, there's a good chance your savings could use a boost.

For a secure retirement, younger workers should aim to save 15% of their gross pay — including any employer match — in their 401, 403(b), or 457 plan, experts say. If you're not at that percentage yet, it's not too late to catch up. And you don't have to do it all at once. By regularly increasing your contributions over a few years, you can reach your target without taking a significant bite out of your paycheck.

Figure out how much more you can save. Our Savings Boost calculator can show you how to grow your nest egg by raising your contributions. Even small increases can have a huge impact over time.

For example, take a 30-year-old worker earning $50,000 a year and contributing $96 from their paycheck to their retirement plan every two weeks. After 35 years and a 7% annual return, their account would total $200,843. By raising their biweekly contribution by $50 each year, they would be a millionaire at age 65, with an account balance of $1,113,831. 

Don't leave free money on the table.  An easy way to jump-start savings is to make sure you're contributing enough to your retirement plan to get the full employer match, if offered through your plan. A potential match is 50 cents for every dollar a worker contributes, up to 6% of pay. So, if you earned $60,000 and contribute 6% annually, or $3,600, your employer would kick in $1,800. That's free money — every year.

Make it automatic. Many employers offer workers the ability to automatically increase their contributions each year, so they don't have to think about it. If your employer offers this option, sign up. If they don't, set a time each year — like during open enrollment in the fall — to up your contribution.

Put that raise to work. If you get a pay raise, quickly bump up your retirement plan contributions before you get used to living on a bigger paycheck. You don't have to devote your entire raise to retirement savings — after all, your other expenses have likely gone up, too. If you get a 3% raise, consider increasing your annual retirement contribution by 1% or 2%.

Discuss additional ways to boost your savings. Connect virtually with your ICMA-RC Retirement Plans Specialist.

Please note: The contents of this publication provided by ICMA-RC is general information regarding your retirement benefits. It is not intended to provide you with or substitute for specific legal, tax, or investment advice. You may want to consult with your legal, tax, or investment adviser to review your own personal situation. Some of the products, services, or funds detailed in this publication may not be available in your plan. This document contains information obtained from outside sources and it references external websites. While we believe this information to be reliable, we cannot guarantee its complete accuracy. In addition, rules and laws can change frequently.

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