Thinking about saving for your future retirement can feel daunting, especially in the early days of your career. It’s important to know that saving for retirement is a decades-long process that is different for everyone and depends on a wide variety of factors, including career, employment status, income and lifestyle.
While there is no one-size-fits-all plan, here are some tips and guidelines to help you navigate saving for retirement in the decades to come.
In your 20s
Planning for retirement can feel challenging, especially when you’re starting out in your career. Still, it can be a great time to develop positive financial habits, like building an emergency fund or nest egg. The 50/30/20 model (50% of your net income goes towards needs, 30% towards wants, 20% towards savings and paying off debt) can be a good place to start if you need help allocating your income.
If you want to go one step further, consider saving 10% of your salary in a 401(k) or other employer-sponsored retirement fund. Pay attention to your employer match if it’s available – your employer may match all or part of your contribution up to a certain percentage. You can also look into alternate retirement account options, such as a Roth IRA.
Above all else, your 20s are a great time to create good saving habits. Remember, saving something now is better than saving nothing at all.
In your 30s
By the time you are in your 30s, you may feel somewhat more settled in your career, lifestyle choices and financial habits. Alternatively, you may have gone through milestones such as getting married, starting a family, taking out a mortgage or going back to school for your second career. No matter what life changes are happening, it’s still important to make saving for the future a priority.
If it’s possible, commit to your 401(k) savings with 10%, 15% or even 20% of your salary. As in your 20s, contributing to a Roth IRA account may also make sense for your situation.
Other habits to utilize in your 30s include reevaluating your weekly or monthly budget to see where you can save more. Finding money to save wherever you can is particularly important, as you may be starting to set aside funds for life milestones. Again, it may be a good time to seek out a financial advisor if you have questions about optimizing your savings and planning for the future.
In your 40s
By the time you reach your 40s, you may be starting to think seriously about saving as much as you can for your retirement and your family’s future. It’s important to stay on track with the progress you’ve made so far. If you haven’t been able to save as much as you had hoped up until now, there’s still time to set aside what you can for the years ahead.
You might also have considerable new expenses popping up for your family members or loved ones. Consider reaching out to a financial advisor if you are feeling unsure about or struggling to allocate your income in a way that supports yourself and your family now and in the years to come.
In your 50s
Your 50s are another time of change and reflection. They can also be a great time to ramp up your savings to ensure you have extra cushioning in retirement.
Consider what your retirement income will look like and start to do some basic calculations. Ask yourself important questions. What kind of lifestyle can you afford? Where do you want to live? What kind of healthcare costs are you thinking about? Is downsizing in the cards? If these questions feel too daunting to tackle by yourself, a financial advisor may be able to help create an actionable plan.
In your 60s
Getting more granular about your retirement plan in your 60s is key to your long-term financial health. At this point, it can be helpful to start to put together monthly and annual budgets based on your retirement savings, other savings accounts and any passive or active income. Get as specific as possible about what sort of income you will have, how your retirement savings will be put to use and what this means for your daily life. Are there any assets that you want to sell before you retire? Would you consider downsizing your home? What is the financial impact of legacy planning for your immediate family?
As you get closer to retirement, a financial advisor may be able to help you make sure you have all of your ducks in a row. No plan is entirely foolproof, but doing what you can now to feel financially secure in the future can be well worth the effort.
Disclosure: This article is for educational purposes about banking products. It is not intended to provide legal, investment, tax, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should refer to the disclosures financial institutions provide for various products and consult a qualified professional.
