Maximizing Today to Build Your Tomorrow 


Everyone wants the freedom to retire on their own terms—and that typically requires a certain amount of financial flexibility. But when resources are limited, it’s natural to prioritize day-to-day obligations over saving for the future.

Perhaps you’re one of nearly 45 million Americans with outstanding student loan debt.1 Or, you carry credit card balances on par with the average American at $5,315.2Perhaps you feel as though you don’t have anything left to put towards your savings after paying bills and stocking the fridge.

Sound familiar? You’re not alone. Nearly two out of three 40-year-olds have less than $100,000 saved for retirement, while 1 in 5 in their 70s have less than $50,000 saved.3

In the face of such financial challenges, it’s common to defer retirement planning efforts and hope that someday in the future you’ll be in a better position to save. But the reality is, putting away even small amounts throughout your career can make a significant impact on your long-term savings. By saving early and often, you can avoid having to play catch-up as you near retirement and also realize the power of compounding interest and investment returns.

Why Start Now?

Growth over time chart to show bottom line time really is money.

Spreading your retirement savings contributions over many years can help you break down a large goal into smaller, more attainable steps. In this way, you can increase your savings potential without feeling a major impact to your current lifestyle. Here are some things to consider: 

Begin by Budgeting: The 50/30/20 Rule

If you’re not sure how to start saving for retirement, a first step to consider is to take a close, honest look at the money you have coming in and going out on a monthly basis. It’s not comfortable, but it’s critical to truly understand your obligations and spending patterns so you can identify opportunities to save.

Everyone’s financial picture is a little different, but many budgeters have found success with the 50/30/20 Rule. This suggests putting 50% of your monthly budget towards needs, 30% towards wants, and the remaining 20% towards savings and investments. In reviewing your current budget, try plotting your expenses against this framework to get an idea of how they stack up.

If you find that needs are taking up the lion’s share of your available monthly cash, you may consider doing some legwork to find ways to lower your essential expenses. Consolidating credit card debt onto a lower-interest card may be a good way to reduce monthly payments. Student loan refinancing platforms can help you identify offers to get debt payments down too. When it comes to utilities, like Internet and phone service, switching providers may allow you to take advantage of new customer promotions and discounts.

If the wants column is dominating your budget, consider which items you could cut back on, or cut entirely, without significantly impacting your quality of life. Review accounts or subscriptions you may have on autopay to make sure you’re not paying for anything that you no longer use. And if impulse purchases are the budget buster, try instituting a 24-hour waiting period before making a purchase to see if the desire fades before you buy. The goal isn’t to eliminate the things you enjoy; it’s about finding small ways to free up funds. Any amount you contribute to your retirement savings account can have a major impact over time. 

Shift from a Spending Mindset to a Saving Mindset

As you progress in your career, you’re likely to see increases in your compensation. When you get a raise or a new job with higher pay, it’s easy to earmark those extra dollars for needs or wants. In fact, of the 60% of working Americans who received a raise in the last year, 42% still aren’t saving for retirement—at all.4

However, a bump in pay offers a great opportunity to increase your retirement contributions without feeling a difference in your budget, particularly when your expenses haven’t changed. And with an employer-sponsored retirement plan, you may also be able to set up automatic increases so that your contribution percentage rises by a point or two each year, ideally coinciding with annual raises and bonuses.

Explore Workplace Plan Benefits

Another potential advantage of saving through a workplace retirement plan is that your employer may offer some kind of matching contribution to encourage you to save and help you grow your nest egg. This is money that they put into your account for every dollar you contribute, up to a specified cap. Once you’ve met any vesting requirements, their contributions are yours to keep – that’s money on the table you may be missing out on. Keep in mind, though, the availability and structure of matching contributions varies across organizations. Be sure to check with your employer about whether this benefit may be available to you.

Workplace retirement plans can also offer tax advantages. If you’re saving in a traditional 401(k) or 403(b), your contributions are made from your pretax pay. In effect, this lowers your taxable income, which in some cases, might even lower your tax bill. Check with your employer to learn more about how contributions are deducted from your pay. 

Start Wherever You Are: It's a Matter of Time

Planning for your retirement is a long game. For most, it’s the ultimate financial goal. Buying a car, financing a home, and funding a college education may take years of planning, but they all have much more defined and condensed timelines than saving for retirement, which can span the length of your working life. And unlike those other goals, you can’t take out a loan for retirement. The lifestyle you lead when you retire will be, in large part, shaped by the contributions you make along the way. That’s why it is important to start saving starting today and leverage the practices discussed to begin putting your retirement savings to work.






This material has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. The strategies discussed in this material may not be appropriate for everyone.

Tax laws are complex and subject to change. Morgan Stanley Smith Barney LLC (“Morgan Stanley”), its affiliates and Morgan Stanley Financial Advisors and Private Wealth Advisors do not provide tax or legal advice and are not “fiduciaries” (under the Investment Advisers Act of 1940, ERISA, the Internal Revenue Code or otherwise) with respect to the services or activities described herein except as otherwise provided in writing by Morgan Stanley and/or as described at Individuals are encouraged to consult their tax and legal advisors (a) before establishing a retirement plan or account, and (b) regarding any potential tax, ERISA and related consequences of any investments made under such plan or account.

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