How long should YOU be saving for retirement?

How long should YOU be saving for retirement?

March 08, 2022

When should you start saving for retirement? A lot of us are presented with our first retirement plans straight out of college. You get your first job and you elect to have some of your paycheck automatically deposited into your 401(k) plan. But is this enough? Should you be saving more than a couple percent of your paycheck each year?

For most people, yes. We need to consciously save for retirement, rather than simply directing 3-5% to our 401(k)’s. This might mean changing our lifestyle to increase our 401(k) contributions as much as we can, up to the limit. This might also mean utilizing several savings buckets, whether you qualify for IRA contributions or simply by investing extra cash in a brokerage account. As we advance through our careers, extra cash flow should be directed to future savings for our retirement.  

But when should you start? Is 35 years enough to save for retirement? Do you need 40? Or maybe you just need to save for the last 20 years!

The truth is, it’s different for everyone. There is no one magic number, but the best day to start is today. The longer you invest, the more you can take advantage of compound interest and have your money grow for you. Saving throughout your career is not only a step in the right direction but it can grow your assets to meet other financial goals as well, like giving back to charities or passing wealth onto your kids and grandkids.

If you have 40 years ahead of you before retirement, now is a great time to start saving. Contribute to your company’s 401(k) plan, receive the employer match if offered to you, and consider opening an IRA if you qualify. If you’re closer to retirement, say 10 years out, and worried that you don’t have enough time to save, start now. At this point in your career, you may be making more money and have more disposable income to contribute to savings, you may have built up a comfortable nest in social security benefits, and you may even have a pension from the start of your career. It’s never too early or late to start saving and the best way to understand if you’re stowing away enough, how much longer you’ll need to work, and where to begin, is by completing a financial plan to fully understand your current financial situation.

Retirement savings is like a lot of other challenging tasks in life. It’s all about the delayed gratification. We put money away for years and years, investing it diligently and monitoring the growth, risk, and economic environment for the day to come where work becomes optional.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.