Perspectives

Top 10 Reasons to Start Saving for Your Future

With life expectancies increasing, you could spend 30 years or more in retirement. Social Security probably won’t cover all of your retirement expenses. And inflation may  push up prices each year. These are just a  few reasons to save for your future. Your company’s retirement plan offers even more. Here are our top 10 reasons to start saving through your plan today.

Reason #10: You may need more money than you think. People are living longer, and it’s not uncommon to enjoy  a 30-year retirement or longer. That means your retirement savings may have to last you almost as long as your  working career.

Reason #9: Inflation—things just keep getting more and more expensive. Remember what an ice cream cone cost 10 years ago? Just think how expensive it will be to take your friends or grandchildren out for ice cream when you’re retired.

Reason #8: Unlike today’s retirees, you may not be able to count on Social Security. Most of us are going to need additional retirement income. One way to save that money is to join your employer’s retirement plan. 

Reason #7: Your employer’s retirement plan offers you several different investment choices—so you decide how your savings are invested. Depending on your situation, you can stick with higher-risk stock investments now and allocate more of your investment into lower-risk bond and money market/stable value investments when you near retirement. 

Reason #6: It’s easy to participate in your employer’s retirement plan because you don’t have to make a big commitment. You can save as little as 1% or 2% of your pay—for many, that’s just a few dollars a week.

Reason #5: The plan keeps you on a disciplined savings path. Because your contributions are directly deducted from your paycheck and deposited into your plan account, you don’t have the temptation to spend that money somewhere else.

Reason #4: It doesn’t matter if you’re still working for the same employer when you retire. The vested portion of your plan account is portable, which means that if you change jobs, your vested account can move with you.

Reason #3: Every before-tax dollar you contribute to the plan is one less dollar you include in your taxable income on your tax return today. That’s the benefit of before-tax contributions—they can lower your current taxable income.

Reason #2: Your savings can grow tax-deferred. That means you don’t pay taxes on your earnings until you take money out of the plan. The money you would have paid Uncle Sam gets the opportunity to grow and compound for your future. 

Reason #1: Because of the benefits of compounding—when money makes money, and then that money has a chance to make money—the sooner you start saving for your future, the easier it will be to reach your goals. Compounding makes the money you save today more powerful than the money you save tomorrow. 

Start saving for your future

There’s no reason not to enroll, so don’t put it off any longer. Enroll in your employer’s retirement plan today and start saving for your future. For more information check with your plan’s website or speak with a plan representative.

This article has been prepared by T. Rowe Price Retirement Plan Services, Inc., for informational purposes only. T. Rowe Price Retirement Plan Services, Inc., its affiliates, and its associates do not provide legal or tax advice. Any tax‑related discussion contained in this article, including any attachments, is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding any tax penalties or (ii) promoting, marketing, or recommending to any other party any transaction or matter addressed herein. Please consult your independent legal counsel and/or professional tax advisor regarding any legal or tax issues raised in this article.