Closing the Gap

If your current savings balance and savings rate aren't enough to fund the retirement you want, there's more than one way to close the gap.

Increase your contribution percentage. The best and fastest way to close your retirement savings gap is always to save more. Increase your savings rate as much as you can to fund the retirement of your dreams. And the earlier you act, the better!

Adjust your asset allocation. Risk and return typically go hand in hand. This means that the more aggressive your investment strategy, the more likely you will realize over time a higher rate of return. The higher your rate of return, the faster your account balance will grow and the more money you will have at retirement. Remember, however, that there is no guarantee that a riskier investment strategy will generate higher returns.  The longer your investment time horizon, or years until you retire, the more able you are to pursue an aggressive strategy because you have time to weather the ups and downs of the market.

Reduce your retirement income needs. We have assumed that you will need 80% of your current income when you retire. If you are able to live off less, you won't need to save as much.

Work Longer. While working for a longer period may not be our first choice, working a couple more years can significantly reduce the amount you will need for retirement because the period you will be retired is shorter. Rather than planning on retiring at 65, consider working until 67 or 68.

Consider other sources of retirement savings. If you have savings accounts outside of your retirement savings plan account, or if your spouse has a separate retirement savings plan account, you may still be on track once those savings are factored into the equation.

Visit the RETIREMENT WIZARD if you want to see how these factors impact your retirement savings needs.