How do you know if your retirement plan is on track?
Fidelity released a guide (How much do I need to save for retirement? 3/16/16) to help you with your retirement plan savings.1 According to the guide, by age 30 you should have at least one time your current salary saved. At age 40, that jumps to three times your current salary in savings and by age 50, you should have six times your salary in savings.
30 1x Salary
35 2x Salary
40 3x Salary
45 4x Salary
50 6x Salary
55 7x Salary
60 8x Salary
If your savings aren’t quite up to par, here are five things you can do this year to increase your retirement plan savings:
1. Increase your contribution by 1% each year until you reach the maximum contribution amount. If you are making up for lost saving time, consider increasing your deferral percentage twice a year instead of once (most employers permit you to modify your contributions at least twice per year).
2. Research your company match and be sure to contribute enough to qualify for it. Don’t lose out on free contributions!
3. The catch-up provision allows those over age 50 to contribute an additional $6,000 in 2016 to your retirement plan in addition to the annual contribution limit ($18,000 in 2016) on a pre-tax basis. Take advantage of this opportunity to save extra money for retirement or to catch up if you were delayed in saving to a 401(k) account.
4. Look for small ways to save extra money. For example, instead of having lunch out every day, pack a lunch for work once a week and increase your 401(k) contribution by that amount. Or, give up eating out one night during the month and increase your 401(k) contribution by that amount. Every little bit adds up!
5. Contribute a percentage of your salary instead of a flat dollar amount to your plan. Saving by percentage automatically increases your contribution to the plan as your salary increases.
Cosmo Insurance Agency is an independent insurance agency serving surrounding communities in New Jersey. Cosmo keeps its promise to assure an efficient and creative approach to the services we offer. Each of our clients experience a personalized and long-term relationship with us. Our New Jersey based team of health brokers guides our clients in helping them choose the most cost-effective options. By incorporating the latest in technology-based tools and laws on healthcare, employee benefits, life insurance and finance, we keep our clients up-to-date with the plans that encompass all of their needs, whether it is individual or group insurance.
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