Save Enough for What's Ahead?

You’re saving for a variety of goals, balancing immediate needs with long-term aspirations. Whether it’s covering expenses, supporting your family, or planning a vacation, you’re also thinking ahead to build a comfortable retirement. In your 30s, retirement might feel distant, but by your 40s, it starts coming into focus. In your 50s, the vision becomes even clearer, and suddenly, retirement is just around the corner.

No matter where you are in life, now is the time to take proactive steps to secure the financial future you desire. Partner with a financial professional who can help you define and achieve your savings goals—for today and the years ahead.

Experts often suggest that you’ll need about 80% of your pre-retirement income to maintain your lifestyle after retiring. A common rule of thumb is to aim to save 15% of your pre-tax income annually, including any employer contributions. The best strategy to ensure a secure retirement is to start saving as early as possible.

While there are ways to catch up later (see below), prioritizing your future today can position you for greater financial success. Starting early allows you to take full advantage of the power of compounding, giving your savings more time to grow.

If you feel like you’re behind or got a late start with retirement savings, there are actionable steps you can take to catch up. For example, starting at age 50, the government allows catch-up contributions to 401(k), 403(b), and other retirement savings plans. In 2020, the IRS increased the annual catch-up contribution limit to $6,500, on top of the standard contribution limit of $19,500.

For Traditional or Roth IRA accounts, individuals over 50 can also make catch-up contributions of $7,000 annually, compared to the $6,000 standard limit (IRS Notice 2019-59).

You can maximize these opportunities further by delaying retirement, for example, from age 65 to 70, allowing more time for your savings to grow. Additionally, you might consider an annuity, which can provide guaranteed income for life, offering added financial security in retirement.

Life expectancy in the U.S. has increased over the past few decades, which means retirees are spending more years in retirement—often 20 to 30 years or more. While it’s impossible to predict all your future needs, one certainty is the need for consistent income.

Annuities are an appealing option to address this need. They offer protected, reliable income that can serve as part of a comprehensive retirement plan. By providing steady income, annuities work alongside other retirement accounts to help ensure the financial security you need for a comfortable retirement.

Taxes can significantly affect both the growth of your savings and how much you keep once you begin taking income. Distributions from annuities, IRAs, qualified retirement plans like 401(k)s, and pension plans are typically taxed at income tax rates. In contrast, assets outside retirement plans—such as stocks, mutual funds, and real estate—are usually taxed at capital gains rates.

However, there’s an often-overlooked source of tax-free income. Roth IRAs, municipal bond interest, and cash value life insurance can provide tax-free benefits through death proceeds, loans, and withdrawals. Incorporating these strategies into your financial plan can help maximize your retirement income and reduce your tax burden.