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Retirement Topics - Benefits of Saving Now

Why should you enroll in a retirement plan or contribute to an IRA?

Did you know…

  • That retirement can last for 30 years or more?
  • That a common rule to follow is that a retiree will need up to 80% of his/her annual income today to retire comfortably?
  • That the average benefit amount paid monthly by the Social Security Administration is $1,177?

Advantages

  • Tax on employee and employer contributions is deferred until distributed.
  • Investment gains in the plan are not taxed until distributed.
  • Retirement assets can be carried from one employer to another.
  • Contributions can be made easily through payroll deductions.
  • Saver’s Credit is available.
  • Flexible plan options are available.
  • Better financial security at retirement.

Example of time value of money

Future Retirement Savings Value - Assuming 6% annual return

Monthly Savings

5 years

15 years

20 years

$50

$3,506

$14,614 

 $23,218 

$200

$14,024

$58,456

 $92,870 

$500

$35,059

$146,136

$232,176

Additional resources:

Publication 4118, Lots of Benefits when you set up an employee retirement plan
Time Value of Money Calculator
Retirement Savings Tips for Individuals
New Employee Savings Tips - Time Is On Your Side

Page Last Reviewed or Updated: 11-Dec-2014