Saving Enough for Retirement

Saving for Retirement

BECU Investment Services

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Generally speaking, it's important to save as much as you can for retirement. But, every situation will vary based on factors such as annual income.

Most experts agree that putting aside 10 to 15% of your annual pre-tax income for retirement is the ideal amount. If you're doing well financially, you might be inclined to set aside closer to 15%; if you're still finding your financial footing, 10% is just fine. But that's just a general guideline and doesn't take factors into consideration such as your retirement goals, spending habits, and life expectancy.

But saving for retirement is more than just putting aside some of your paycheck every month. When saving for retirement, a little foresight goes a long way. Here are four simple steps to follow to help your planning.

1. Start budgeting

It's already an essential financial practice, but when considering retirement, budgeting can be taken a step further – without leaving your wallet hungry. Start chipping away at wasteful habits. That might mean cutting back on expensive dinners, or just canceling that gym membership you never use. This isn't about depriving yourself of anything, it's merely about redirecting funds so that they can be put towards a better cause. Make certain to “pay yourself first!” Set up automatic contributions so the money never hits your spending account. You'll be surprised at how much you won't miss. Many investors just starting out find that after a few months, they can ramp up the contributions more than they thought.

2. Sign up for 401(k) matching

Many employers offer a 401(k) matching program for employees trying to save for retirement. Depending on policy terms, your contributions to your 401(k) plan could be matched by your employer in a variety of ways; the most common of these is matching a percentage of employee contributions. If your employer offers such a program, be sure to opt in – and if possible, max out. This is basically free money! It goes without saying that this could be a great boost to your savings goals.

3. Adjust what you contribute based on annual income

Say you begin by contributing 10% of your income to your 401(k) when you first open it. Then, after you're at your job for a year or so, you get a raise. Depending on the amount of the raise, consider increasing your contribution to 11%. As your income rises with more work history and experience under your belt, be sure to keep increasing the amount you contribute to your 401(k). If you're concerned you're putting too much aside, keep this rule of thumb in mind: if you're saving 15% of your income now, while earning a paycheck, you could easily live on 85% of your income in retirement.

4. Don't be afraid to revisit and revise

Life happens! Inevitably, your circumstances in life will change, causing your retirement needs to change as well. For this reason, it's important to stay flexible. Are you getting married? Buying a house? Expecting a baby? All of these will have a big effect on your life and should be taken into account when planning for retirement. Remember: when it comes to retirement, a little foresight can go a long way. 

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*Financial Advisors are registered with, and Securities and Advisory Services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC .  Insurance Products offered through LPL Financial or its licensed affiliates.  BECU and BECU Investment Services are not registered broker/dealers and are not affiliated with LPL Financial. Investments are:

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