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Are You Saving Enough for Retirement?

February 17, 2021
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Many pre-retirees’ biggest worry when approaching retirement is the fear that they haven’t saved enough. No matter your age, when preparing for retirement, ask yourself three key questions:

Am I saving (or have I saved) enough?
Are my investments performing to my satisfaction?
Are my assets appropriately mixed?
Below are a few investment strategies depending on your generation:

Millennials (Age 24-39)


Having a savings plan is critical for any financial goal – especially retirement. Millennials are in the best position to begin saving early to take advantage of the power of compounding over several decades.

Start Saving Now
It is as simple as it sounds. Start saving now. Whether it be $50 a month or the maximum annual contribution to a retirement account, just start saving. According to investment management company T. Rowe Price, the ideal monetary value for retirement is 11 times your ending salary at the time of retirement. It is often encouraged to begin saving 15% of your salary, but if that is too difficult of a goal, start saving as much as you can.

Consider a Roth IRA
Roth IRAs are beneficial for young investors in the way that they are taxed. Contributions to these IRAs are taxed, making their distributions in retirement virtually tax-free. (Pending you have held the account for more than five years and are over 59 ½ .) As a millennial and young adult, you would hope that your income will increase as you progress in your career, thus pushing you into a higher tax bracket making a Roth IRA a valuable part of your retirement strategy.

Focus on Growth Potential in Stocks
With retirement decades away, focusing on stocks can benefit a millennial retirement portfolio. Millennials have the time to benefit from long-term growth potential in the stock market while riding out the short-term volatility.

Generation X (Age 40-55)


If you are part of Gen X, you are likely in your highest income-earning years. Many people may still be juggling their finances and working to reach financial freedom. For others, there is a good chance they have paid off much of their debt, such as student loans, or their children may have all moved out and therefore have decreased expenses such as groceries or utilities. Wherever you may be financially, many people have shifted their focus to retirement.

Check your retirement savings progress.
At 45, it is estimated you should have 3x your annual salary saved, 5x by 50, and 7x by 55. If your savings aren’t quite up to the estimated amount, don’t worry yet. There is still time to make small adjustments in your savings plan that could have lasting retirement effects. Plus, at age 50, contribution limits increase, allowing you to contribute more towards your retirement and “catch up” on missed contributions from your youth.

Consider Supplementing Savings with a Taxable Account
In addition to your retirement accounts, a taxable account may be another beneficial vehicle for savings and retirement funding. However, setting aside money into a taxable account can give you more flexibility for your financial goals and personal desires, such as taking a vacation or buying a new car.

Maintain a Healthy Exposure to Stocks
While you may still be over a decade away from retirement, it may be time to move some of your assets into less risky asset classes such as bonds. As retirement nears, moving to a more conservative portfolio may be in your best interest to protect against any market downturn in the early years of retirement.

Baby Boomers (ages 56-74)

As you near/enter retirement, you will likely move from an aggressive investment strategy to a more conservative strategy.

Assess Your Situation
If you are not retired yet, you are likely retiring soon. Now is the time to assess your financial readiness for retirement. Take this time to review your monthly expenses and how these needs will be handled through your one or more retirement account distributions. Be sure to include federal retirement benefits such as Social Security and any old employer 401(k) plans. If you are not sure you are financially ready to retire, consider delaying your retirement a few years, working towards saving more, and paying down any lingering debt.

Tax Diversification Through Multiple Accounts
Do you currently have money saved in a Roth? Have you considered a Roth conversion? This plan may benefit you – if you qualify. Since money invested in a Roth IRA is taxed upon your contribution, they are not subject to Required Minimum Distributions like many other retirement accounts. This allows your money to grow tax-free and provides tax-free income at retirement.

Review Your Asset Allocation
The average retirement lasts more than three decades. This means that you still need your investments to grow even after retirement to continue to support you for years to come. It is essential to diversify your portfolio to ensure you are seeing a return on your investments and limiting your short-term market risk.

At any age, there are steps you can take to begin saving for retirement. By starting early, you position yourself – and your investments – in a place to grow. Create a plan and remain focused, even after you have retired. With a strong investment strategy and a well-rounded financial plan, your investments can carry you through a stress-free retirement. If you’re interested in starting your financial plan, contact one of our financial professionals today to see how we can help you reach financial freedom in retirement.