Expect a Raise? Consider saving it. Boosting your deferral rate into your defined contribution plan by investing your raise is a relatively painless way of paying your future self first. Spend time to be clear about your savings goals, even to the point of specifying where you want to be this time next year.
Review Your Retirement Wellness. Every year you review and renew your workplace health coverage and other benefits. Why not do the same for your retirement plan? Some steps to consider each year include reviewing your investment allocation, paying back 401(k) loans, and reviewing your company’s policies to see if there are savings options you’ve ignored. Also review your non-employer retirement planning as part of your overall Retirement Wellness Review.
Find Your Number. Determine a target goal. I think the best approach is to understand how your savings will translate into retirement income – after all, you are saving now so you can spend it later. If you are 55 or older, BlackRock’s CoRI tool can give you a quick estimate of how much you need to save to reach an income target. If you are younger, try the Department of Labor’s Income Calculator or some similar tool. The point is to have specific milestones to work toward.
Chip Castille, Managing Director, is head of BlackRock’s US & Canada Defined Contribution Group. You can find more of his posts here.