Resolution: Increase Your Retirement Savings by 1%
January 11, 2011
By Katie Bryan, America Saves Communications Manager
Here’s an easy resolution to help you save more in 2012.
Increase the amount you save towards retirement by 1%.
Saving 5%? Bump it up to 6%. Saving nothing? Start small by putting 1% away. If you are already saving for retirement through your work, upping your retirement contribution is easy. Just visit your HR department and let them know you want to increase your retirement contribution. Want more information about saving at work? Check out this PowerPoint. Even if your employer doesn’t offer a retirement plan, you can still save for retirement, and get some tax benefits in the process, by putting money in an Individual Retirement Account (IRA).
Why 1% is a Great Number
- You probably won't notice a 1% smaller paycheck.
- You'd be surprised the difference a 1% increase can make in the long run. For example, a 30-year-old who saves 6 percent of a $50,000 salary, or $3,000 a year, will have nearly $840,000 banked by the time she has to start taking funds from her 401(k) at age 70½. (This assumes an 8 percent annual growth rate.) If she boosted her yearly contribution by just $500 she'd have nearly $980,000. That's a difference of nearly $140,000.
Want to run your own numbers to see how much a 1% difference would make for you? Visit the Ballpark Estimator.
Have we inspired you to increase your retirement savings by 1%? Let us know on our Facebook page.