Take time to boost your retirement savings
Saving for retirement can feel like an intimidating endeavor, especially as that goal inches closer. When you’re 20 to 30 years out from retirement, the distant notion of retiring one day can begin to feel more like a rapidly approaching reality.
In a Lincoln Financial Group study, 46 percent of survey respondents say that the idea of having enough retirement money excites them. At the same time, 35 percent say that saving for retirement scares them.1
1. Reassess your financial goals
Along with growing your family and your career, comes a new set of responsibilities, so you probably need to update your financial to-do list. Make sure your budget and financial plan still make sense—and that saving for retirement is prioritized appropriately. If you've checked off some goals, like paying off credit-card debt or building an emergency fund, maybe you can put more away for retirement. If you have new goals in mind, like buying a home or paying for a child’s college tuition, don't let them unnecessarily take away from your retirement goal. For example, prioritizing the needs of an adorable new baby or grandchild might be tempting, but you should keep your retirement in consideration, too. The fact is, your future student has other ways for financing college; nobody can get a scholarship or loan to help pay for retirement.
Whether you’re taking care of your family or looking to set aside some vacation funds, it may feel overwhelming to prioritize future savings. If you're waiting until the end of the month to see how much money you have left to save, you're doing it wrong. Most people tend to spend all they have, no matter how much or little it is. But it’s important to save first; then you're likely to only spend what’s left over.
Having your employer automatically deduct your 401(k) contributions from your paycheck makes paying yourself first easy. And you can set up a recurring payment through your checking or savings account to do the same with an IRA.
2. Use your time advantage
Retirement may be getting closer but you still have time on your side. That means you should take advantage of saving and investing while it can still pay off big time. By maximizing your employer-sponsored savings plan, not only do you have the power of compounding on your side, but a company match is the equivalent of free money.
Just look at the numbers: If you can save $60,000 by the time you’re 40, assuming a 6 percent investment return over the next 30 years, your savings would grow to $344,610—without saving another penny. By comparison, if you were to save double that amount, but only gave it half the time to grow, your $120,000 would only total $287,587 after 15 years.2 That’s the magic of compounding at work, proving that saving a little now beats saving more later. Of course, positive returns are never guaranteed.
Another bonus of your youth: You may have the option to consider a more aggressive investing strategy since you have plenty of time to recover from any losses. A financial advisor can help you build a retirement plan that grows along with you.
3. Boost your contributions
Most people’s income peaks between the ages of 35 and 55.3 That makes these years the perfect time to increase your retirement savings. You can make it very easy to do so with your 401(k) by electing to contribute a percentage of your income rather than a set dollar amount. That way every time you get a raise, you're sure to boost your retirement savings, too. Use our Contribution planner to see how even a small dollar investment can impact your retirement.
As your family grows, keep your retirement goals in mind. Establishing the right plan not only helps you, but can help you achieve the retirement you hope to have with your loved ones, too.
Learn more about your retirement needs , and speak with a financial advisor to learn how Lincoln can help you attain the lifestyle you want in retirement.