The year is off to a fast start, but is your retirement plan? To get your retirement plan on the fast track you need to consider increasing your deferral percentage. Experts suggest saving anywhere from 12%-15% annually, which can sound very daunting, but it's easier to do than you may think.
To make that possible you need to do 2 things: maximize your company’s match or profit share and increase your deferral percentage periodically. A participant deferring 5% into their retirement account over a 30 year period should have an account balance of about $150,000. If that same participant defers 5% in year one and then increases their deferral by 1% and caps it off at 15%, over 30 years they will have roughly $375,000 (Assumes: $30,000 Salary, 2% Salary Increase, 6% Rate of Return).
The good news is those projections do not include employer dollars, so your balance could be even higher. Most participants intend on increasing their deferral but it can tend to slip their mind. Some plans offer an auto-acceleration feature. This will automatically increase your deferral periodically. Take advantage of it, if you can.
Union Bank offers a plethora of calculators at our Retirement Education Center. Feel free to utilize the “Retirement Account Contribution Accelerator” and “Retirement Contribution Effects on Paycheck” calculators. These are great resources for predicting how much your account balance will be if you increase your deferral and predicting how much your take-home pay will be reduced by increasing your deferral.
The year is moving very fast, it’s time that your retirement account does the same.