Start Saving Smarter
Retirement Resolutions? We Can Help with That.
Around the start of every new year, we hear a lot of our customers discussing their retirement goals — and how they plan on using the next 12 months to improve their future and start saving smarter in 2017. There are a few adages we hear a lot when it comes to saving and retirement:
- You need to start saving when you’re 25.
- You need at least a million dollars in assets to retire comfortably.
There’s a reason we’ve probably all heard them and it’s because, in large part, they ring pretty true. But what do they really mean?
Let's start with the optimal age to start saving.
When Should I Start Saving for Retirement?
Saving money is one of those things that, like so many other good habits, is often easier to adopt the sooner you get yourself used to it. So in this case, it is definitely advantageous to start early.
It’s true that the younger you are, the bigger the advantages of saving. You stand to benefit more from compounding interest, and potentially earn more than someone who started saving more money but at a later point in life.
So what if you haven't started saving yet? That's not necessarily reason to panic. There are lots of investment opportunities, like money market accounts, CDs, stocks, bonds and more, that can help you jumpstart, or regain, your savings goals.
How Much Do I Need to Save to Retire?
The general wisdom when it comes to saving enough for retirement is to plan to replace about 70 to 90 percent of your pre-retirement income through savings and Social Security. There are also general rules about saving twice the amount of your annual pre-tax salary by the age of 35, but again, if you're not quite there it shouldn't be cause to panic.
The idea here is simply to start yourself on a reasonable and realistic path toward saving, whether you're 22, 37 or 45. As a result, the exact target you'll need to hit will vary based on your age and your assets. For example, if you've built up some savings, but haven't arranged an official 401k or IRA just yet, you'll still be able to count that in determining what you'll eventually need to retire.
The same is true if you own a home, property or any other large, non-monetary assets. Projected spending habits also play a role in determining the size of your nest egg. If you have champagne taste, for example, looking at your retirement goals may put you into a more beer-budget frame of mind. And that's not a bad thing. If, on the other hand, you're used to living pretty frugally, you may be able to find places to invest more wisely to help your hard-earned savings work even harder toward your retirement goals.
Planning for how you want to live when you retire should play a key role in the kind of saving you do now. There are plenty of tools to help you decide how much you’ll need — check out Nerd Wallet’s retirement calculator for a good place to start. While it’s wise to take the answers these calculators provide with a grain of salt, they can at least help put your financial situation into some perspective. So whether the outcome is favorable, or not so much, you'll be able to take the next step in planning for your goals.
Where to Get Started
At Dime, we have retirement planning resources to help you toward your goals, no matter where you’re starting from. Our financial experts can help you evaluate your assets, your spending and your goals, and discuss what kind of accounts, like money markets, IRAs or a mix of both, make the most sense for you. If you've set a goal to start saving — or to be smarter about saving — in 2017, we'll help you take the first step and be there for you for all the rest of them.