Saving for Retirement

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Your retirement savings options

Knowing how—and how much—to save is a big part of your retirement program

Retirement planning experts always tell us to save, save, then save some more. Though the drumbeat can become tiresome, its message couldn't be timelier. The sooner you start saving, the better off you'll be.

To help you make informed decisions, we offer some important ways to potentially improve your retirement savings options:

Maximize your employer plan contributions. Participate in your employer-sponsored retirement plan and don't leave money on the table—contribute at least the amount your employer will match and more if you can. As your income rises, consider investing the extra money in your plan.

Open an IRA. Whether Roth or traditional, an IRA can be an excellent way to augment your employer plan and continue saving. The Investment Company Institute says IRA owners tend to have significantly more assets than those who don't have one. Learn more about which IRA is right for you

Don't forget about annuities or taxable investments. Even if you've maxed out on the retirement side, you still can supplement your savings with other types of investments. For example, annuities can be suitable for those who have contributed the maximum to employer-sponsored retirement plans but still want to set aside more tax-deferred money.

Other tips to consider:

  • Keep your retirement savings intact. Don't withdraw or borrow money from your retirement accounts unless it's absolutely necessary. If you do, you'll probably suffer some taxes and penalties and lose the opportunity to enjoy compounded investment earnings on the amount you withdraw.
  • Consider requesting a direct rollover if you change jobs. Have the assets in your employer plan sent to your traditional IRA or your new employer's plan. You'll avoid taxes and penalties, keep your assets growing tax-deferred, and continue to benefit from the power of compounding.
  • Review your retirement portfolio annually and rebalance it if necessary. After you select a mix of funds that meets your goals and risk tolerance, shifts in the financial markets may cause your portfolio to change from its original allocation. If so, you can adjust by redirecting new investments or gradually moving money into different funds.
  • Take the long-term view. Frequently trading in and out of funds to "chase returns" is not a viable investment strategy. If history is any indication, today's hot fund could well be tomorrow's big loser.
  • Expect years with losses. A portfolio of 80% stocks and 20% bonds produced a negative annual return 23 times between 1926 and 2008, yet its average annual return was almost 10%.* If you're a risk-averse investor, you can buy more generally stable options such as money market funds—but understand that lower risk often leads to lower long-term returns.
* Source: The Vanguard Group. The returns on bonds are represented by long-term U.S. corporate bonds and on stocks by the S&P 500 Index. The returns include the reinvestment of income dividend and capital gains distributions; they do not reflect the effects of investment expenses and taxes.


  • All investments are subject to risk.
  • Investments in bond funds are subject to interest rate, credit, and inflation risk.
  • Past performance is no guarantee of future results.
  • Diversification does not ensure a profit or protect against losses in a declining market.
  • Consider consulting a tax advisor about your financial situation.
  •  An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although a money market fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in such a fund.
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