July 24, 2014
SMALL INCREASES IN YOUR SAVINGS TODAY CAN MAKE A SIZABLE DIFFERENCE IN RETIREMENT.
When you are working toward your retirement savings goals, T. Rowe Price recommends saving 15% or more of your annual salary for your retirement. Based on our research, investors who save this amount are best positioned to meet their income needs in retirement.
To many investors, the 15% target may seem out of reach. However, this figure represents all the money put toward your retirement each year, including:
- Your contributions to a workplace retirement plan
- Any matching or other contributions from your employer
- Your contributions to any IRAs
If you can't reach 15% right away, begin by saving a percentage of your income that is appropriate for your personal situation. Then gradually increase that number until you reach 15%. For example, if you started by saving 5% of your salary for retirement and increased those savings by two percentage points each year, you would reach the target in just five years. Over 30 years, you would have amassed close to the same amount in retirement savings that you would have if you had contributed 15% from the very start.
OPTIONS FOR SAVING MORE
Many workplace plans allow you to automatically increase your salary deferrals each year. Using your plan's auto-increase function is a good way to consistently increase your savings over time. You might also consider increasing your contribution rate when you receive additional compensation, like a bonus or a raise. Directing this money toward your retirement accounts does not affect your current budget and moves you closer to achieving your retirement goals.
To learn more about saving for the future, visit troweprice.com/NationOfSavers.