Retirement Savings Calculator
Questions about saving money for retirement?
The guiding principle to building a retirement nest egg is “saving a lot early versus saving a lot later.” Ideally, you should start saving for retirement as soon as you have a regular paycheck. For many people, that’s in their early 20s when they finish college or trade school and start first full-time jobs. It’s easier to start retirement savings when you’re young and probably have fewer responsibilities. And thanks to compounding interest, you’ll earn more with money you set aside for retirement when you’re young as it grows exponentially over time.
Determining the sum of money you need for retirement takes a mix of practical understanding of your financial situation and thoughtful consideration about what matters most to you. Expert opinions on how much you need differ slightly. A general rule is:
- By your 20s, save about 2x your salary
- By your 30s, save about 3x your salary
- By your 40s, save about 4x your salary
- By your 50s, save about 8x your salary
- By your 60s, save about 10x your salary
Planning is the most important aspect of a successful transition into retirement. Planning early and reevaluating often is critical. One way to establish a sound financial plan is to work with a financial advisor, who can help you not only determine goals but work to make them a reality. UMB offers comprehensive wealth management and financial planning services. Contact a UMB financial planner to see what services you may be eligible for.
There are a variety of retirement vehicles to consider contributing to that offer their own unique tax benefits and incentives. Two of the most popular options include an individual retirement account (IRA) and 401(k).
An IRA, whether Roth or traditional, is a savings mechanism that allows you to invest funds for your future retirement. The sooner you begin putting money into an IRA, the more time your money has to grow before you reach 72, the age at which you are required to begin taking distributions from the account. IRAs prepare you for retirement and provide tax advantages, allowing you to choose whether to make contributions tax-free (traditional) or receive your distributions tax-free (Roth).
Unlike an IRA, a 401(k) is a tax-deferred retirement savings account that employers offer their employees. Employees contribute money to their account via elective salary deferrals, meaning a percentage of their salary is withheld and contributed to the 401(k). Often, employers will match employee contributions up to a certain limit or percentage as an added employer benefit.
To create a retirement savings strategy that’s right for you, it’s important to work with an experienced, trusted financial advisor. UMB offers comprehensive wealth management and financial planning services. Contact a UMB financial planner to see what services you may be eligible for.
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