Retirement savings: three steps to start investing in yourself

source: iStock

Several years ago — when I was in my mid-30s — I was chatting with a friend my age. I mentioned something about saving for retirement, and she said, “Whoa, you’re already thinking about that?” That stopped me cold. My wife and I had been ramping up our own retirement savings around that time, running calculations and realizing that — while we still had a good shot at reaching our goals — we would have some catching up to do. It was jarring to hear that my good friend might be even further behind than we were. It made me wonder, “Why don’t people talk about this and get all the help they can?”

Having access to a retirement plan through your employer may help boost your savings According to Navient’s latest Money Under 35 study, young adults whose employers offer a 401(k) plan have an average of $32,851 saved for retirement, nearly 75 percent more than those who don’t have that access ($18,879).

Turns out, retirement is a daunting concept. I’ve had the opportunity to work with retirement plans from the inside out. I’ve heard from people who were struggling to make retirement savings a priority because retirement felt too far away or they thought it was too late to make a difference. Maybe calling it something else — like “financial independence” — would make it easier to face. Because that’s what it’s all about: at some point, we’ll want to stop doing what we have to do and start doing what we want to do. That might mean working less, not working at all, traveling, tackling a dream project or spending quality time with loved ones. Whatever you call it — and whatever your age — it’s important to face reality and start planning. The good news is getting there may be easier than you think. Here are three simple steps to consider.

Step 1: Start saving today

It’s never too late or too early to start saving for retirement. It doesn’t have to be a lot. Start with whatever you can spare. The sooner you do, the more you could benefit from the power of compounding interest.

Consider Laura and Jeff, two fictional savers. Both graduate from college in 2018, when they’re 22 years old. They earn decent starting salaries, but both have rent and student loan payments due each month. Laura knows it’s important to start saving for retirement, so she sets a strict budget for herself and immediately starts contributing $200 to her 401(k) from each biweekly paycheck. But Jeff procrastinates. He waits 10 years, until he’s 32, to start saving the same amount to his 401(k). Both continue saving and earn a 6 percent return on their investments, compounded daily. At age 65, Laura would have more than $1 million saved and could be ready to think about retiring. Jeff, however, would have only about half of that, meaning he might need to keep working for several years before retiring.


Like Laura and Jeff, you probably have many other financial obligations: repaying student loans; saving for a down payment on a home; paying rent or mortgage; paying off credit card debt; saving for emergencies; or funding a child’s education. Think about all those goals, prioritize them, and set a plan of action for each one. Just remember: we can get loans for many things in life, but no one will loan us money for retirement.

Tip: Pay down student loan debt faster or save more for retirement? It’s a common conundrum. An important part of the decision is your own personal view on debt. From an economic perspective, the short answer is that it depends on your unique situation and goals. If you think returns on your retirement savings will be lower than the interest rates on your student loans for the foreseeable future, it may be smart to focus on paying down your debt. But if you think you can earn more on your retirement savings — and/or if your employer offers a 401(k) match — you may want to put more money toward retirement. If you can swing it, of course, a healthy combination of both may be the best option. Connect with a certified financial professional and map out a strategy that’s right for you.

Tip: If your employer offers a retirement plan matching contribution, be sure to take full advantage of it so you’re not leaving free money on the table.

Step 2: Adjust over time

Your needs will change over time. Make sure your savings habits change too.

  • Investments: When you’re young, you have more time to take advantage of compounding interest and to ride out the market’s ups and downs. So you might choose a portfolio that’s more heavily weighted toward stocks than bonds. But as you near retirement, you may want to manage your risk by reducing your stock holdings.
  • Savings rate: As you progress in your career, your salary will (hopefully) increase. Bump up your savings each year, too, as you get raises, and pay off student loans and other debt. If you’re 50 or older, take advantage of catch-up contributions that allow you to save thousands more each year than younger savers. Whatever your age, be sure to calculate an ultimate savings goal for yourself, so you can measure your progress and ensure you’re staying on track.

Tip: Not comfortable with investing? Visit the websites of reputable financial firms (e.g., your 401(k) or IRA site) for calculators and articles. You may decide that a target date fund is right for you. These take away some guesswork by automatically adjusting your investment holdings based on your age and planned retirement date.

Step 3: Take care of yourself

Great work so far. You’re getting financially fit! Make sure you’re physically fit too so you can enjoy your retirement years. Fidelity estimates that a 65-year-old couple retiring today may need about $280,000 to cover health care costs in retirement. The better your health, the better you can manage those costs. So exercise often, don’t smoke, keep a healthy diet and get regular checkups.

Tip: Work out with a friend. Studies show we’re more likely to stick to a fitness routine if others are around to support us.

This quote from an unknown author resonated for me: “Retirement is wonderful if you have two essentials: much to live on and much to live for.”

Brian Grimm is the director of content marketing at Navient. Between that and being a dad and husband, he tries to make time for running, cooking, reading, discovering new music … and occasionally checking in on his retirement savings progress. (Oh, and he’s definitely not a certified financial/investment professional. Be sure to speak with one of those before making financial decisions.)




Navient helps its clients and millions of Americans achieve financial success through services and support.

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