FAQs and Calculators

While your circumstances are unique to you, generally speaking, a good target to aim toward for retirement savings is 10-15% of your annual salary per year.

If you are not currently at these savings rates, consider establishing an Increase Program to achieve 10-15% after a few years. For example, if you are saving 5%, increase your saving rate by 2% each year for the next five years until you reach 15%. Some employer-sponsored plans offer an Automatic Increase Program that can automate this process for you!

Check out the Retirement Account Contribution Accelerator calculator to see how this could impact your retirement savings.

You can get a snapshot of where your retirement savings may take you by completing a Five-Minute Financial Plan.

Generally, here are some savings milestones to aim for:

• By age 30 have 1 year of salary saved for retirement purposes
• By age 40 have 3 -5 years of salary saved for retirement purposes
• By age 50 have 6 – 8 years of salary saved for retirement purposes
• By age 60 have 10 – 12 years of salary saved for retirement purposes

Check on your progress by completing a Five-Minute Financial Plan and reviewing your retirement income snapshot.

Your investment strategy should be aligned with your specific retirement goals. A Target Date Fund, or Managed Account, is an investment that automatically adjusts the level of risk based on the amount of time left for the goal.

For example, if the year is 2025 and the target date fund is for the year 2065, there are 40 years remaining until the target date is reached; therefore, the fund will take an aggressive approach to investing. However, if the year is 2025 and the target date fund is for the year 2030, the fund will take a far more conservative approach as there are only five years until the target date is reached.

You have four primary options for old employer-sponsored plans:

1. Leave it at the old recordkeeper
2. Cash-out the account (subject to taxes and penalties)
3. Rollover the account into your new employer-sponsored plan
4. Rollover the account into an Individual Retirement Account (IRA)

Click here to complete our “What should I do with my old 401(k)/403(b)” survey for a recommendation on what to do with your old accounts. 

Pre-tax, or Traditional, contributions reduce your taxable income today, meaning they have not yet been taxed. Savings in these accounts grow tax-deferred, and when you take money out in retirement, withdrawals are taxed as ordinary income.

• • This is preferable if you are in higher income-tax brackets or feel tax pressure today.

Roth contributions do not reduce your taxable income today, meaning they have already been taxed. Savings in these accounts grow tax-free, and when you take money out in retirement, withdrawals are not taxed.

• • This is preferable if you are in lower income-tax brackets and have many years for the investments to grow.

Term Insurance protects you for a specified period. These tend to be more straightforward policies, including a premium (how much you pay for the policy) and a Death Benefit (the payout to your beneficiaries if you were to pass away). Because of this simplicity, the cost of these policies is relatively low.

Permanent Insurance protects you for your entire life or until you cancel the policy. There are many flavors of permanent insurance, including Whole Life, Universal Life, and Variable Life. Each has unique features which should be tailored to your needs. Because of their complexity and longevity, the cost of these policies tends to be higher.

Determining how much life insurance you should carry depends on a number of factors:

• How much premium can you afford?
• What are you protecting through the insurance coverage?
• Do you have other goals associated with the policy?

Generally speaking, having 7 to 10 times your gross income will provide adequate coverage for most individuals. Want to explore a more personalized recommendation? Check out NerdWallet’s How Much Life Insurance Do I Need Calculator.

A Health Savings Account (HSA) can be a powerful tool to save for medical expenses now and in the future. They are the only triple tax-advantaged savings account currently available:

1. Tax Advantage 1: Goes in tax-free. When you contribute to an HSA, your taxable income for the year is reduced by the amount you contributed. i.e., you do not pay tax on contributions to the HSA.
2. Tax Advantage 2: Grows tax-free. As you invest your funds in an HSA, you do not have to pay taxes on trades as they occur in the account. This is known as tax-deferred growth.
3. Tax Advantage 3: Comes out tax-free*. When you use the funds from your HSA for *approved expenses, you take the money out of the account tax-free.

HSA funds can also be used as a retirement asset. After age 65, HSA funds can continue to be triple tax-advantaged for approved expenses, but you can also take direct distributions from the account just as you would a Traditional IRA (distributions fully taxable).

Disability Insurance is an insurance policy that provides financial compensation in the event you are unable to work. Every policy has its own stipulations and rules, so here are some things to look for when selecting a policy:

Type of Disability Insurance

• Short-term Disability: Provides coverage for a few months, usually up to six months
• Long-term Disability: Offers benefits for longer periods, sometimes until retirement age

Definition of Disability

Policies vary in how they define a disability. Common definitions include:

• Own Occupation: The inability to perform duties of your specific job
• Any Occupation: The inability to work in any job for which you are reasonably qualified

Waiting/ Elimination Period

This is the time between when a disability occurs and when benefits begin. Short-term policies often have a waiting period of 7-14 days, while long-term policies might have 30, 60, or even 180-day waiting periods.

When selecting insurance, ensure the coverage applies to your specific concern (if any). For example, some policies provide coverage for pregnancy but may have specific rules surrounding approving coverage.