When to Start
The time is now! If you are earning a paycheck, start saving for retirement as soon as you can. The sooner the better! The main reason for this is because your money will have more time to grow. Compounding makes a huge difference, and those 5 or 10 years of extra saving can turn into a lot more money than you would’ve had before.
How to Start
Don’t be intimidated – you can start small and work your way up to saving more. Something is better than nothing, so even putting a couple of hundred dollars into your retirement savings is a good start. The next step is to be consistent. Keep adding to the pile periodically and don’t tap into that money unless necessary.
How Much to Save
One general rule-of-thumb is to save at least 15% of your yearly pre-tax income for retirement each year. This goal includes any contributions from your employer. The amount you save depends on what you plan on doing once you’re retired. If you plan on traveling the world or buying a new sports car, your retirement fund will look different. It’s smart to have an idea of your retirement plans so you can adjust how much you save accordingly.
When to Retire
The answer to this is different for every person too, depending on your retirement plans and how much you’ve already saved. The average retirement age is 62, but many people retire earlier or later in life. Some people also enjoy working and staying busy, so working doesn’t really come with an age limit. Knowing what age to retire comes with lots of planning and financial analysis, so be sure to talk to an advisor to know if you’re on track.
What if You’re Falling Short?
If you’re saving like crazy but still won’t meet your retirement goals, it’s time to consider some alternatives. The most effective change to make is delaying your retirement by just a few years. Not only will this add to your fund, but it takes off a time you would’ve had to pay for to make it through retirement.
If you haven’t started saving already, now is a great time to start! If you have any questions, visit AbbyBank to contact a knowledgeable Personal Banker and learn more about our retirement saving options.