Saving for retirement is a marathon, not a sprint. Minor adjustments made now – even a one percent contribution change – can lead to greater savings come retirement.
According to TIAA, you should consider saving 10-15% of your income for retirement (this includes your employer match). Fidelity Investments has provided the following simple retirement savings rule of thumb to help you determine how much you need to save in the long-term: Aim to save at least 1x your income at age 30, 3x at 40, 7x at 55 and 10x at 67.
GW’s 403(b) retirement savings plan allows you to make pre-tax or post-tax (Roth) contributions. The 2018 IRS annual contribution limit for the 403(b) plan is $18,500. Employees age 50 and older may contribute an additional $6,000, for a total of $24,500.
If you choose to make pre-tax contributions to your retirement savings account, you can benefit from tax advantages. “Pre-tax” means that the amount you designate from your pay to your retirement account is not subject to income or employment tax withholding, reducing your taxable income. You can use the “Take-Home Pay Calculator” at www.NetBenefits.com/GW to estimate how your pre-tax contribution to your retirement savings plan will affect your take-home pay (click on the “Tools & Resources” tab on the homepage, then select “Take Home Pay Calculator” from the list). TIAA also offers a suite of retirement calculators and financial tools to help you with your retirement planning.
Commit to saving more this year by increasing your retirement savings contribution, even if it’s just by one to a few percentage points.
Don’t leave money on the table! If you are also enrolled in the 401(a) retirement savings plan, be sure to maximize GW’s matching contribution, which is up to 6% of your eligible compensation if you contribute 4%. This match is in addition to the 4% GW base contribution.
Looking for another healthy way to increase your retirement savings? Consider opening a Health Savings Account (HSA). HSAs offer a triple tax advantage – contributions are made tax-free (via payroll deduction), any interest earned is tax-free and account owners may make tax-free withdrawals for qualified medical expenses. While you may use HSA funds to pay for eligible healthcare expenses now, you can also use the account to save for healthcare costs in retirement because the account does not follow a “use it or lose it” rule; unused funds roll over from year-to-year, and the HSA remains with you even if you leave your job. You can maximize your potential to save for the future by opening an investment account (once you reach the minimum account balance of $1,000). With the HSA through PayFlex, there are a variety of mutual funds to choose from, and there are no transfer or trading fees and no minimum investment amount for a trade request. GW will also match your HSA contributions, dollar-for-dollar, up to $600 for those with Employee Only medical coverage and up to $1,200 for those covering dependents under their medical plan. The catch? You must be covered by a high deductible health plan (HDHP), such as the GW Health Savings Plan (HSP), as well as meet a few other criteria. Learn more about HSAs here.
