Diving Deeper Into Retirement

When you’re juggling day-to-day expenses, emergency bills, and just trying to keep life on track, retirement planning might feel like the lowest priority, or completely out of reach. But knowing how retirement planning works, and how even small steps now can make a difference later, can support your long-term financial planning, even if you can’t fully focus on it now. 

Benefits of a Retirement Account

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Retirement accounts are often thought of as long-term tools, but they also offer benefits that can help in the short term:

• Tax Advantages: Many retirement accounts offer tax perks, either by reducing your taxable income now (with traditional IRAs or 401(k)s) or letting your money grow tax-free (with Roth IRAs).
• Compound Growth: Your savings can grow over time through interest and investment earnings. Even small, consistent contributions can build up significantly when given time.
• Peace of Mind: For those who expect to receive Social Security payments during retirement, these savings can help fill the gap between benefits and rising living expenses. And for those who may not qualify for Social Security, building your own savings becomes an even more important way to support your future.
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Take Advantage of Matching Plans
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‍Whether you're saving for retirement through a job or on your own, it’s worth checking what options might be available to you.

If your workplace offers a 401(k) or 403(b) retirement plan, check to see if they also provide matching contributions. That’s essentially free money added to your retirement savings. For example, if your employer offers to match up to 4% of your pay, and you contribute 4%, you’re effectively doubling your contribution.

Even if you’re not able to contribute the full amount your employer matches, putting in something helps you benefit from part of that match.

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What If You Don’t Have Access to a Plan at Work?

If you don’t have access to a retirement plan through your job, the State of California offers CalSavers, a state-sponsored Roth IRA (Individual Retirement Account) that can help you start saving. 

• CalSavers is designed for workers whose employers don’t offer retirement plans. Self-employed Californians, gig workers, and others can also sign up directly.
• You can contribute through payroll deductions (if your employer is enrolled) or set up automatic contributions from your bank account.
• There’s no employer match required, but your money still grows tax-advantaged and stays with you, even if you change jobs or employment situations.
• You don’t need a minimum balance to start.

Visit our Start a CalSavers Account resource on MyMoneyPath to learn more about how it works and how to begin.
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What If I Don’t Have Much to Save?‍

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If you feel like you can’t afford to save for retirement, you're not alone. It's important to be realistic about barriers, while also looking at your overall financial picture. Some retirement accounts grow through interest or investment earnings, which means your savings can work for you while you focus on other priorities.

Even small, consistent contributions, like $10 or $20 a month, can grow over time. Starting small still counts.

Building room in your budget for retirement starts with identifying realistic action steps:

• If you’re unsure where your money is going, start by taking inventory of your income and expenses.
• Create a basic budget, or adjust the one you already have.
• If this all feels overwhelming, consider setting a SMART goal to learn more. That might mean reading about retirement basics, watching a short video, or asking your employer what options are available.

There are many ways to start.‍

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Want Help Getting Started?

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If you're not sure where to begin, here are some first steps to consider as you get started:

1. Get a rough idea of what saving for retirement could look like. The CalSavers Retirement Calculator can help you estimate how your savings might grow over time based on how much you’re able to contribute.
   
   Note: This tool is based on Roth IRAs and their contribution limits. It doesn’t factor in annual auto-escalation, but it can still give you a helpful starting point.‍
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2. Consider setting a SMART goal Your goal might be to read more about retirement options, talk to your employer about your plan, or open an account and start with a small contribution.
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3. ‍Create and Follow a Budget tool. It can help you get a clearer picture of your income, expenses, and where retirement savings might fit into your plan.

Whether you want to start small or dive right in, MyMoneyPath is here to help you take the next step when you’re ready.

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