When should I begin investing for retirement? And how much should I invest?
When to begin investing for retirement and how much to invest are two fundamental retirement investing questions. The answers vary from person to person. Still, some general guidelines can help:
When? We generally recommend folks begin investing as early as possible. The sooner you begin, the more time you have to benefit from compounding interest. Our partners at Vestwell explain:
The impact of growth over time can make a huge impact on your accumulated savings due to compounding interest, dividends, capital gains, and investment returns. As an example, Mary saves $250/month starting at 28 years old and Marco saves $250/month starting at 35.* Assuming an annual tax-deferred rate of return of 7.00% compounded monthly, both Mary and Marco retire at age 67 and the difference in their savings is $254,000** despite having only a $21,000 difference in total 401(k) contributions.
How much? This is actually two questions: how much should I invest per pay period (or per month, or year, etc.), and how much should I have saved by the time I retire in order to be able to live with dignity for the duration of my retirement years (aka, what’s my number)? User-friendly tools can help you answer both of these questions. Consider using a retirement savings calculator from a reputable online source.
For more fundamental information about 401(k)s and retirement investing, check out this Vestwell article.
We are here to help.
Want to fine tune your retirement saving strategy? If you are a Just Futures plan participant, you can contact us to reserve a meeting with a professional about your specific situation and how to set yourself and your family up for a dignified retirement while helping build a regenerative economy.
If your employer uses a plan administrator other than Just Futures, ask your human resources representative whether they offer support.