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The money you save will likely make up a significant portion of the money available to you in retirement. To ensure you have enough to meet your goals over the long term, it’s important that you start early by investing both in your employer’s plan and on your own.

It’s Never Too Early—or Too Late—to Start Investing

When should you start saving for retirement? Right now would be a good time. Whether you are just out of school, at the peak of your career, or winding down after decades of work, retirement is something you should continually be saving for.

Download the Retirement Savings Guide. It has been designed to help you think carefully about your retirement goals and explore strategies and solutions that can help you achieve them.

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Put Time on Your Side With Compounding

When saving for retirement, your greatest asset is time. When you start early, any investments you make have a greater chance to compound over time. And when you invest through a tax-advantaged retirement account, your earnings can compound tax-deferred until you’re ready to withdraw the money.

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Participate in Your Employer’s Plan, Then Consider an IRA

If your employer offers a tax-deferred retirement savings plan, you should at least contribute enough to maximize all employer matching contributions. You should then try to follow these steps: Consider saving more for retirement with an IRA. Review the income requirements for a Roth or Traditional IRA and consider whether you expect to be in the same, lower, or higher tax bracket in retirement. If you still can afford to save more for retirement, continue to contribute the maximum allowed by your plan.

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Manage Risk While Maximizing Reward Potential

Before you decide how to invest your savings, consider when you’re going to need the money. This is also known as your time horizon. Once you’ve determined the number of years you will be investing and how much fluctuation you can tolerate in the value of your savings, you can begin to choose an asset allocation strategy. This strategy will serve as a blueprint for the way you invest, guiding your decisions about how much of your savings to invest in stocks, bonds, and short-term investments.

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The Right Asset Allocation Strategy Can Help You Manage Risk

The best way to manage risk is through diversification. Remember, different asset classes offer varying potential for growth—and different levels of risk. For instance, stock funds, while offering the greatest potential for long-term growth, also tend to undergo the greatest short-term price fluctuations. Conversely, short-term investments, such as money market funds, tend to offer relatively low returns but greater price stability.

One way to pursue growth while reducing overall risk is to spread your savings among investments with different levels and types of risk and return potential. In other words, don’t put all your eggs in one basket. You can diversify by spreading your savings among stocks, bonds, and money market/stable value investments, or you can invest in a variety of different investments in one category, such as large company stocks and small company stocks or investment-grade bonds and high-yield bonds. Of course, diversification cannot assure a profit or protect against loss in a declining market.

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How to Select the Investments That Are Right for You

Do your homework before selecting investments by following these steps:

  1. Diversify by choosing an asset allocation strategy that takes your time horizon and risk tolerance into account. For example, if your time horizon is more than 10 years, you may want to consider investments that offer the strongest potential for growth, such as stock funds.
  2. Review the T. Rowe Price investment options:
    • Learn more about the T. Rowe Price Retirement Funds
      You may also want to consider one of the T. Rowe Price Retirement Funds. Each fund offers a diversified portfolio that is professionally managed to a specific retirement date. These funds are designed to help you meet your changing financial needs as you save for, approach, and live in retirement. Investing in the Retirement Funds is easy. Simply pick the fund closest to the year you expect to retire.
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Investing for Your Retirement Goals

T. Rowe Price provides a range of products and services to help you invest for retirement. Review the following options to see which may fit your needs best:

  • Both the Traditional IRA and the Roth IRA allow you to save for retirement while deriving tax advantages. If you qualify, you may be able to make tax-deductible contributions to a Traditional IRA or tax-free withdrawals from a Roth IRA. You can also convert your Traditional IRA to a Roth IRA regardless of your modified adjusted gross income (MAGI).
  • Traditional Rollover IRAs may be appropriate for those who might be changing jobs, retiring, or deciding what to do with money left in a former employer’s retirement plan.
How Much Do I Need to Save?

Our Retirement Income Calculator can help you decide how much you’ll need to save to meet your goals and how long your savings are likely to last.

T. Rowe Price offers Advisory Planning Services to assist those saving for retirement, approaching retirement, or already retired, as well as those just seeking a thorough evaluation of their overall investment portfolio.

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