To Save More, Imagine Your Retirement
Now make your dreams come true by saving more in your tax-advantaged plans.
Imagine this: You’re retired and learning Italian for a trip to Rome, or you’re running along the beach as you train for your first half-marathon.
Whatever your life will look like in retirement, envisioning it beforehand could spur you to save nearly one-third more than you would otherwise, says a new report by investment manager Capital Group, which surveyed 1,200 millennials, Gen Xers and baby boomers.
Half of those polled were first given 15 questions to help them imagine the activities they would do in their sixties, seventies and beyond, and then they were asked how much they should save from each paycheck for retirement. The rest were asked how much to save first and then told to imagine retirement.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Those who pictured their retirement first said they should save 21.2% of each paycheck, on average. The other group said they should save 16.2%. When people imagine all the positive things they can do in retirement—traveling, visiting grandkids—they are motivated to save more for those goals, explains Heather Lord, head of strategy and innovation at Capital Group. This finding may help the financial industry develop ways to encourage saving that are more effective than the usual nudges that play on workers’ worries and guilt, Capital Group says.
Start by imagining what kind of life you’d like to retire to, instead of looking at retirement as an escape from the things you hate about work, says Steve Vernon, research scholar at the Stanford Center on Longevity. Think beyond the “vacation” aspects of retirement, such as traveling or playing golf, that might only add up to several weeks in a year. Instead, consider what you can do that will provide meaning and the social contacts that work typically provides, he says. Consider whether you’ll downsize or work part-time—all of which can have a significant impact on your finances.
Once you know what you want to do in retirement, the next step is to see if you’ll be able to afford to support that vision. Invest as much as possible in tax-advantaged accounts. In 2019, you can sock away up to $19,000 in a 401(k) or similar plan, or $25,000 if you’re 50 or older. Use an online calculator such as the one at troweprice.com/ric to check your progress.
-
The November CPI Report Is Out. Here's What It Means for Rising PricesThe November CPI report came in lighter than expected, but the delayed data give an incomplete picture of inflation, say economists.
-
Online Banks Still Lead on Rates, But Is Switching Worth it Now?As interest rates trend down, online banks keep an edge on yields, but service, access and flexibility still matter. Here’s how the trade-offs stack up.
-
I'm 73 and dread winter, but I can't afford to be a snowbird.How can a snowbird wannabe warm up without the expense? We asked professional wealth planners for advice.
-
457 Plan Contribution Limits for 2026Retirement plans There are higher 457 plan contribution limits in 2026. That's good news for state and local government employees.
-
Medicare Basics: 12 Things You Need to KnowMedicare There's Medicare Part A, Part B, Part D, Medigap plans, Medicare Advantage plans and so on. We sort out the confusion about signing up for Medicare — and much more.
-
The Seven Worst Assets to Leave Your Kids or Grandkidsinheritance Leaving these assets to your loved ones may be more trouble than it’s worth. Here's how to avoid adding to their grief after you're gone.
-
SEP IRA Contribution Limits for 2026SEP IRA A good option for small business owners, SEP IRAs allow individual annual contributions of as much as $70,000 in 2025, and up to $72,000 in 2026.
-
Roth IRA Contribution Limits for 2026Roth IRAs Roth IRAs allow you to save for retirement with after-tax dollars while you're working, and then withdraw those contributions and earnings tax-free when you retire. Here's a look at 2026 limits and income-based phaseouts.
-
SIMPLE IRA Contribution Limits for 2026simple IRA For 2026, the SIMPLE IRA contribution limit rises to $17,000, with a $4,000 catch-up for those 50 and over, totaling $21,000.
-
457 Contribution Limits for 2024retirement plans State and local government workers can contribute more to their 457 plans in 2024 than in 2023.
-
Roth 401(k) Contribution Limits for 2026retirement plans The Roth 401(k) contribution limit for 2026 has increased, and workers who are 50 and older can save even more.
