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Saving a little extra makes a big difference to retirement

  • A New Year’s resolution to save just one percent more a year can make a big difference when it comes time to retire, according to financial experts.

New Year’s resolutions can be invigorating.

It’s a brand new year and a chance to do things right. As such, some resolutions tend to show up again and again on lists, such as save more, spend less and lose weight.

A key to making resolutions stick though is to make the goals concrete. So if saving more is your aim this year, try this more specific goal on for size — set aside just 1 percent more for retirement.

Here are a few reasons why:


“People sometimes get overwhelmed thinking about it (retirement saving), so we are trying to chunk it up for them,” said Christine Marcks, president of Prudential Retirement, which is urging people to pledge, in person or online, to save one percent more in 2017 toward their retirement.

The general rule of thumb is to save 10 to 15 percent toward retirement, but that is often too much off the bat. So start small and try it out — you can add another percent each year if you want.

It doesn’t take much time either. You can have withdrawals automatically made from your paycheck or checking account, and setting up the process can take just minutes.


“The fact is, people who make resolutions on money matters tend to feel better about the state of their finances and are generally in better financial shape than those who don’t,” said Ken Hevert, senior vice president of Retirement at Fidelity Investments.

Saving just 1 percent more can make a big difference.

Fidelity gives the example of someone at age 25 who earns $40,000 a year. If they add an extra one percent monthly to a 401(k), that’s only an extra $33 a month, but it will mean an added $3,970 at retirement. And it adds up, no matter the age. At age 45, someone earning $70,000 a year is going to have an added $1,880 each year in retirement if they increase their savings by 1 percent now.

This minor adjustment also removes another major hurdle for some savers: affordability. The 1 percent savings, which may be pretax, is often so small that it the change is barely detectable in your monthly income.


This is a goal you can build on.

If you are already saving, great. But odds are good you could be saving more, so why not nudge it up? If you aren’t saving at all, this is an easy place to begin. You can easily add another 1 percent each year. Or if it feels comfortable, bump it up a notch later in the year. It doesn’t have to be painful.

Plus you get the bonus of seeing your contributions grow, which can provide the positive feedback you need to make better choices down the road.

“Make a New Year’s resolution to fund your future,” Marcks said.

Remember: saving for retirement is never going to happen unless you start.

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  • The hardest thing to do is, to get started. Once you get used to it, the rest is easy. I learned early to put in my raises or portions of it onto an IRA or whatever. The best kind are when the employers gave you 3 – 6% matching money. You won’t even miss it, once you get used to it.

    • bd is right, the hardest thing to do is to get it started. but, it’s worth it when it’s time to retire.

      next, do it right. put your hard earned money into a roth ira where your money can start working for you.

    • True. Start with $5 a week or a month – anything. If your employer offers a 401K put *something* into it. If they match say 50% the value is enormous. If you are afraid of the stock market, fine, direct it to the 401K’s money market fund. Yes, the return is a pittance but the principal is safe.

      Let’s say you allocate $20 a paycheck and you are in the 20% combined tax bracket. The take home pay will only be reduced by $16 since the 401K contribution is taken out before taxes. Then, the employer adds his match (say 50%). So, for foregoing $16 in take home pay you have a $30 (your $20 and the employer’s $10) investment that grows tax free. You’ll never miss the $16.

      • Excellent analysis. What needs to be emphasized to the saver is that the savings deposited into retirement are pre-tax and the government is subsidizing a portion. Many people don’t think about this and just say they don’t have the funds to do it. Then they miss out.

      • If you have a company match, put in at least up to the amount matched. If not, you’re just walking away from FREE money. Pay cash when you can. Use coupons. Learn how to cook and eat at home. Lots of ways to save money, but you have to be motivated. Not wanting to be broke and hungry SHOULD be a big motivator.

        • Retire early as I did. Started retirement investing from my first job at age 18. Extra money went into retirement accounts Roth IRA/401k plans, then other investment accounts. Maxed out my 401k, did catch up contributions. Transferred earlier IRA investments to the Roth IRA to avoid taxes later on.

          I’ve always lived way beneath my means. No bling, no expensive toys. Kept my cars 10 years or more where there in no loan payment, cheaper insurance.

          Never cosign education or other loans for your children as you will be liable for the remaining amount if they default. A long term bill you do not need. If you can, help with payments.

          Went from a 30 year mortgage to 15 years, did not take any money out, paid it off early and saved 10’s of thousands in interest. Installed PV and solar water on the home to reduce utility bills. Took advantage of all available tax credits.

          Retired with no mortgage, home paid off, no major bills. Loving retirement and the freedom to do what I want when I want. Enjoyed an Alaskan cruise and 15 day European Viking River Cruise. In October, went to Albuquerque for the annual hot air balloon festival.

  • younger generations (under 40) live largely on credit and loans, just to keep up with the Joneses. One day they’re 50, and have nothing but debt to show for it, a real life waking nightmare. At my Father’s behest, I started saving for retirement when i was 17. I’m now 58 and eyeing early retirement with great confidence. two 401K’s, pension, IRA, securities, and cash. I dont have to wake up scared every day like many people. I hope they heed this very smart article.

  • Never buy anything on credit other than your house and maybe a car. Pretty much the wife and I did that and after 49 years of marriage we are retied and EVERYTHING is paid for. Only expenses we have are food water electricity etc.

    • “Never buy anything on credit?” Really? Need to rethink this. More like never buy anything on credit you can’t afford to fully pay off each month. Here is why:

      – Your credit rating largely comes from bills paid on time. No credit cards doesn’t help your credit score.

      – Can’t buy airline or other tickets/services online with cash. Plus a cash purchase of airline tickets will be on the TSA’s radar screen.

      – Pay for something, trip, etc, with cash and something goes wrong, good luck getting your money back. Easy to stop payment on credit cards.

      – Many credit cards offer extended warranties on purchases, special discounts/prices. Yes you can sometimes get a discount with a cash purchase, you will lose some of the protections a credit card offers.

      – If you are traveling and an emergency hits, ATMs have daily withdrawal limits, you may not be in an area where your bank or credit union has an office, may be a weekend or holiday.

      – Some purchases/services cannot be done in cash. Buy food & drink during an airline flight only with a card.

      – Carry a lot of cash and lose it, money is gone, you are out of luck. Lose a credit card, cancel it, get a new one.

      Again nothing wrong with credit purchases as long as paid off each month, not carried for years.

      • I think your are missing his point. Fine to use credit card, just pay all the bill off every month. I use credit cards, but only thing I ever bought on credit was a house. I only buy a car that is over 10 years old, and drive it until it rust out.

        • Exactly what I said, why repeat?

          Buying a car over 10 years old puts you in line for major maintenance work if mileage averages 10k a year. As in timing belt (Camshaft) inside the engine, suspension work, cooling hoses replaced etc. Not smart.

        • I change all timing belts myself , look at you tube to learn how, I have four cars range from 91 to 2001 and they all run like kittens. I like timing chains like two of my engines have. Lowest mileage on autos is 170k and highest 250k. Engines never required internal repair. These are both German and Japanese cars. Take care of them they take care of you…

    • I know personally of friends who like you trusted in Wall Street investors and lost their as-. They’re in their seventies and cannot retire because they were sold out by corporate greed. Lo and behold that these are the very people that the Chump has appointed into his administration. Duh!

      • Nothing wrong with professional investors as long as you know what your investment goals are, monitor them. There are no quick get rich plans, you must invest in quality.

        Vanguard is one of many quality investment companies. One must choose wisely.

        Sounds like these people buried their heads in the sand and let the world take them for a ride.

        Caveat emptor (Let the buyer beware)

    • Anyone who watched the Suze Orman financial show learned all about this. People would part of the show by having her help them make the decision and if they could afford it. So many times she said “Denied” when their payment plan was credit, they really didn’t need the item.

  • Vanguard has done the hard work for me by automatically increasing my retirement contributions by 1% each year. It’s a lot easier to do when you don’t have to look at it and don’t even feel it. I know there are lots of you out there who are reading this and knowing in their gut that they aren’t saving enough for retirement. If your retirement plan has such an option, do it the FIRST day you return to work after the long weekend. You’ll be glad you did when you retire.

  • To retire you not only need to save, but buy your living quarters so your monthly mortgaged is fixed for your loan period , 15-30 years as you choose. Also forget the lux car or truck, buy basic transport, or take public transit if you can. I would really like a f150 raptor but it makes no sense, maybe when I retired. Not far from retirement now and have never owned a new car, dealerships really turn me off. The other thing learn how to do your own home and car repair. With Internet now YouTube an forums can teach you to fix anything. In a way knowing how to fix something or build something yourself is better than stocks, that way when all goes to hell you have a skill.

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