Articles and Resources
When it comes to saving for retirement, time can be one of your greatest allies. The sooner you begin, the longer your investments have to work for you. Getting started sometimes involves jumping over some mental hurdles.
Point: Getting started in a retirement plan sounds like a difficult and complex process.
Counterpoint: Actually, it’s never been easier to begin.
You can enroll in your retirement plan in just two steps. Simply designate an amount to be automatically withheld from your paycheck, and select how you’d like to invest your contributions from the plan’s investment options. That’s it! It is also important to consider designating beneficiaries for your retirement account when you enroll so that your assets can be distributed according to your wishes if you pass away
Point: I can’t afford to save for retirement — at least, not enough to make a difference.
Counterpoint: Contributing to your employer’s retirement plan is one way to save for retirement. And even small amounts invested regularly can add up
People often have a tendency to spend what they make and not know where their money goes. You may have received a pay raise, only to increase your spending by the same amount soon afterward. If you look closely at your monthly spending habits, you can determine what level of contributions makes sense for you.
Small amounts can add up over time:
Point: I’m thinking of putting off my retirement saving for now, but I’ll catch up later.
Counterpoint: Waiting to begin saving could cost you.
The earlier you start, the better:
The most important decision
you can make about saving for
retirement is just that — to save!
*As of December 31, 2023.
All hypothetical examples assume an 8% average annual return compounded monthly and a 4% annual withdrawal rate after the accumulation period. These are point-in-time views and as such do not take into account any growth or loss during retirement. Without investment growth/ loss during retirement, a 4% annual withdrawal rate would deplete retirement savings in 25 years. Examples are for illustrative purposes only and do not reflect the results of any particular investment, which may differ, or taxes that may be owed on tax-deferred contributions, including a potential 10% penalty for withdrawals taken before age 59½. Regular investing does not ensure a profit or protect against loss in a declining market.
This content, developed by Capital Group, home of American Funds, should not be used as a primary basis for investment decisions and is not intended to serve as impartial investment or fiduciary advice. All Capital Group trademarks mentioned are owned by The Capital Group Companies, Inc., an affiliated company fund. All other company and product names mentioned are the property of their respective companies. On or around July 1, 2024, American Funds Distributors, Inc. will be renamed Capital Client Group, Inc.
