Articles How Can I Be Sure I'm Saving Enough for Retirement?

October 13, 2016

If you’re already saving for retirement, congratulations. You’ve taken a big step toward ensuring your future financial security. Your future self will thank you. If you’re like many people, you may have lingering questions, too, like “Am I saving enough?” and “How can I tell?”

The “Am I saving enough for retirement?” calculator can tell you whether you’re on target to meet your savings goal. By entering information about your income, expenses, savings, pensions, and more, you’ll find out how many years of your retirement will be fully funded.

Seven Ways to Build Your Savings

If your savings could use a boost, these tips can help.

1. Use tax-advantaged retirement savings accounts. Many retirement accounts offer special tax advantages that can help you grow your money. They include Thrift Savings Plans, 401(k), 403(b), and 457 plans, and traditional and Roth individual retirement accounts (IRAs).

2. Aim to contribute 10 to 15 percent of your income. If that amount doesn’t fit into your budget, contribute as much as you can to your retirement plan. If you have an employer plan and your employer matches a portion of your contributions, be sure to contribute enough to earn the full match.

3. Increase the amount you save over time. Consider increasing your savings every year or every time your income goes up. Also, consider ways you can trim your budget to save more. Increasing your savings rate by one percent every year can help you reach your goals.

4. Set smaller interim goals. Most people will need at least eight times their final salary by age 67 to fund retirement at 85 percent of pre-retirement income (for example, a final salary of $50,000 would require $400,000 in savings—$50,000 x 8 = $400,000). Use the chart below as a benchmark for savings; the salary you’re earning at each age could be your savings goal.

Age Savings
35 1x your salary
45 3x your salary
55 5x your salary

5. Maintain a well-balanced portfolio. Holding a mix of asset classes, such as stocks, bonds and cash equivalents, can help you manage investment risk while pursuing attractive returns. The percentage of your total investments that you devote to each asset class is your target asset allocation.

6. Rebalance regularly. As one asset class outperforms the others, your holdings will stray from their original targets. For example, maybe you set a target of 70 percent for stocks, but if stocks have a good year, they could increase to 80 percent. Rebalancing involves buying and/or selling to restore each asset class to its original target. You‘ll probably want your targets to become more conservative as you approach retirement.

7. Finish strong. When you reach age 50, take advantage of catch-up contribution limits for tax-advantaged retirement plans. In 2016, you can contribute an extra $1,000 to traditional or Roth IRAs and an extra $6,000 to a Thrift Savings Plan or 401(k), 403(b), or 457 plan.

The Retirement Center on Navy Federal’s website can help you continue to build your retirement savings or schedule a consultation with one of our financial advisors with Navy Federal Financial Group by calling 877-221-8108.

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