You might need about 80% of your current income to maintain your lifestyle in retirement. While a pension and Social Security benefits might provide much of that income, some of your retirement income will probably need to come from additional savings.
That’s where your retirement plan comes in. Contributing to your plan can help you fill an income gap you might have in retirement. It also provides advantages such as these:
Flexibility — Start small and increase your contributions anytime; stepping up your contributions just 1% a year can make a huge difference in the amount you’ll have when you retire
Compounding — Your earnings are continually reinvested, helping your account balance grow; that will help you reach your savings goals faster with less money out of pocket
Tax advantages — Your contributions can be made pretax, reducing the amount you owe in federal income taxes for the year you contributed 1
Once you decide to invest in your retirement plan, how much should you contribute? To find out what’s right for you, try using these tools: