Life Lessons: Don't Have a Mid-Career Savings Crisis

Working adults should prioritize saving for their retirement even though there may be many other spending priorities competing for their paychecks.

Life can get in the way of saving enough for retirement, especially when you are busy with your job, family, and the other things that are important to you right now. However, keep in mind that your future financial security may depend on how much you save during your working years. Avoid getting so caught up in what's going on today that you neglect to prepare for tomorrow.

Dueling Goals

If one of your financial goals is to help your children pay their college costs, it's likely that those expenses will occur before you retire. You may even consider waiting to save more for retirement until after your kids' college tuition is paid. However, if you keep putting saving for retirement last on your list of financial priorities, you may not have time to save enough for your retirement.

If you have to choose between funding your retirement and funding your children's college education, keep in mind that you're probably going to need a lot more money for a comfortable retirement than your kids will need for college. When the time comes for college, your children may qualify for financial aid. And they can always pay some of their college costs by working part-time while in school.

No Time to Lose

You may reach your mid-career years and realize that life has gotten in the way and you don't have as much saved for retirement as you'd like. Don't panic. You still could have several years left to accumulate money in your plan account. Increasing the amount you contribute by even a small amount potentially can have a big impact on your account value at retirement. The more money you save now, the better off you're likely to be later on. And the sooner you start saving more for retirement, the more time your money will have to benefit from potential compounding.

Put Your Plan to Work

It's easy to save more for your future. Once you decide to increase your contribution amount, that money will be automatically deducted from your paycheck each pay period and put into your plan account where you won't be tempted to spend it on anything else.

Consider maintaining a portion of your portfolio in stock investments because of their growth potential.2 Though the stock market can be volatile over the short term, stocks have historically produced higher long-term returns than the other major asset classes. (Past performance is no guarantee of future results.) When you are in your mid-career years, you still may have several years left before you plan to retire to recover from any market downturns that occur.

Your situation is unique, so consider consulting a professional before taking action.