Three steps to getting your retirement savings plan on track | American Funds

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Retirement Planning

Three steps to getting your retirement savings plan on track

Memories of market turmoil and some discouraging retirement forecasts may have left you unsure about your retirement prospects:

  • Social Security won’t be enough. Currently, Social Security may only provide about 40% of a retiree’s needs, on average. A majority of experts and workers expect Social Security to account for even less retirement income in the future.
  • Market declines may mean re-evaluating what retirement looks like. The cyclical nature of the market makes it unrealistic to expect double-digit returns — positive or negative — every year. Anticipating more realistic long-term results may mean adjusting your retirement goals.

    Many experts say you may need 70% to 85% of your final annual salary for each year you’re retired.

  • Forced retirement could happen to you. Some workers plan to put off retirement and work longer to build up their savings. However, unexpected health problems and layoffs are forcing many into early retirement.
  • Workers fear they aren’t saving enough. Nearly a quarter of workers in a recent survey believe they will have to save 30% or more of their salaries to achieve a financially secure retirement.*
  • Know your target. Many experts say you may need 70% to 80% of your final annual salary for each year you’re retired.

* 2013 Retirement Confidence Survey®, Employee Benefit Research Institute® and Mathew Greenwald & Associates.

 

Don’t be discouraged by these statistics and projections. Take the following steps to set up a plan that works for you.

  1. Educate yourself

    Saving and investing intimidate many people. The worst thing to do is to not save at all. If you haven’t already, learn the basics of saving for retirement and investing.

    The articles on this website will help you learn about the tax advantages of retirement saving, the value of starting to save as early as possible, incentives for investors at any stage of life, and much more.

  2. Evaluate your situation

    Once you understand the basics of investing, you’ll want to apply your knowledge to your own situation. How close are you to retirement? How much have you already saved? How much are you planning to invest in the future? Where are you invested?

    The American Funds Retirement Roadmap® can help. Use it to give your savings strategy a checkup. The tool helps you estimate how much you might need to save for retirement and assesses your projected savings plan to see if you’re on track to meet your goal. Plus, it can help you figure out where to invest your money, depending on how much time you have until retirement and how much control you want over your investments.

  3. Make necessary adjustments

    If your current savings plan looks like it may come up short, consider your options. Can you afford to increase your paycheck deductions? Would it make sense to open an IRA? The investment calculator makes it easy to see how small adjustments can make a big difference over time.

    Be sure to speak to a financial professional if you have specific questions about your situation.

Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.

Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional or downloaded and should be read carefully before investing.