We will show you how you could see up to six-figure savings in 20 years.

We work to live, not live to work. With this in mind, it is important to plan what our life will be like when we reach the golden years. If you aspire to be relaxed, comfortable and retired, you must start planning your retirement strategy as soon as possible.

A good retirement plan consists of healthy strategies, which include savings through different products, with the goal of maximizing distributions when we retire. The key is to start as soon as possible.

How much do you need to save for your retirement?

To determine how much you should save for your retirement, there are 4 key factors to consider.

Age

As a general rule, the earlier you want to retire, the more savings you will need, and the earlier you should start contributing to your retirement. The less time you have between your current and your retirement age, the more you would have to contribute per month to get to the same place.

Work situation

If your employer offers a retirement plan and matching, take advantage of it to the fullest! One benefit of these plans is that some companies match part of your contribution. This is done automatically; your contribution is withheld from your paycheck and the money is saved without passing through your hands. Out of sight, out of mind.

If your employer does not offer a retirement plan, do not let that stop you. Remember to pay yourself first.

  • As a general rule, our goal should be to save 20% of our salary, but depending on your life stage this may sound aggressive. The important thing is to start with a percentage that is comfortable for you and little by little, start increasing. 

  • Remember, the important thing is to keep that contribution constant for a long time.

Debts

Any debt with a high-interest rate should be treated as a priority for payment. Create your budget and consider making extra payments to debt. Debts not only affect your retirement plan, but they also put at risk other financial goals you may have.

Personal goals

We don’t save just for retirement, but also for emergencies, buying a car or a house, education, and vacations. Focus on the big picture and prioritize according to the lifestyle you want to live.

The benefit of activating your plan now vs in 5 years

As we have hinted throughout this article, the most important step is to start. The sooner, the better. Although each 401(k) plan is different, these allow for exposure to the stock markets, giving you the potential to generate interest, dividends, and capital gains by putting your money to work.1

 

Let's look at this example with an estimated annual return rate of 8%.

Starting ageTarget retirement ageYears investingMonthly contributionTotal investmentEstimated value with 8% annual rate
María256540$150$72,000$523,651
Juan306535$200$84,000$458,776
Yamilette356530$200$72,000$298,071

Although this example should not be considered financial advice, you can see how a difference of 5 years affects how much money we will have available for retirement and how much we would have to contribute monthly to achieve the goals1.

Create a personalized plan with Retirement Snap2

There is no one size fits all retirement strategy. Although you may recognize the most popular retirement accounts, such as IRAs, 401(k), and the Keogh Plan, we all have different goals in life and need different strategies.

Take advantage of the Retirement Snap service to help you navigate all the available options. Retirement Snap connects you with a retirement specialist to design the best strategy for you.

Retirement Snap considers important factors that will help maximize your instruments, such as:

  • Short and long-term financial goals
  • Risk tolerance
  • Income sources vs. expenses
  • Tax considerations
  • Financial needs
  • Cost of living and future projections.

They say that good things take time, so encourage yourself to visualize your retirement plan according to your long-term goals and take the first step today!

For more details on the different retirement strategies available, please email Popular's Retirement Center at educacionretiro@popular.com and check out Retirement Snap today.