Small increases

20-30 years from retirement

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Increasing Your Contributions Regularly Can Help Build Your Retirement Account

One of the advantages of participating in a retirement plan where your contributions are automatically deducted from your paycheck is the “out of sight, out of mind” principle. But that convenience can also make it easy for you to forget about reviewing your account and making adjustments to future contribution amounts. One way to make sure you are staying on top of your retirement account and contribution amount is to mark your calendar to do an annual review. You can always check your account more frequently, if you’d like.

According to, The average employee 401(k) contribution rate (as a percentage of salary) is 8.9% in 2021.1

Increase Your Contributions

Even with all the financial obligations you may have going on in your life, there may be things you can do to make even just a small increase of 1-2% of your income each year. Here are three ideas you might consider for increasing your contributions.

If you have a qualified retirement plan through your employer but reach your contribution limit, you may consider contributing extra money to an IRA.

  • Get a Raise, Give a Raise

    Next time you get a raise or a work bonus, give your account a raise by boosting your contributions with a portion of that money. This is money that you didn’t have in the first place and probably won’t miss if you redirect it to your retirement account. Even a little bit will mean a lot more down the road.

    Pete the Planner stresses the importance of Saving the Raise in this short video.

  • Do Away with Debt and Save

    The money you are paying each month to personal debt is money that you could be redirecting to your retirement plan. This debt could take the form of credit cards, student loans or personal loans, all of which can inhibit your ability to move toward a healthy financial future. The amount of money you can allocate toward paying down debt depends on your total balances due, interest rates and how much you already have in your personal savings and retirement accounts. Regardless of the amount of debt you have, it is important to put money toward both your debt and savings. Putting off savings until you are debt-free can prevent you from using one of your greatest assets: time. Small contributions over a long period (especially with compounding) can have a significant impact on your retirement goals, versus starting later and saving more. Compounding typically refers to the increasing value of an asset due to the interest earned on both the principal and accumulated interest.

    Here are pointers from Pete the Planner on ways to whittle down your debt.

  • Simple Steps to Spend Less

    Track how much you spend for a month, and then look for ways to reduce your spending and direct those dollars toward investing in your retirement account instead. Here are a few suggestions:

    Cut back on your grocery bill by using coupons or buying in bulk

    Try selling any personal or household items that you no longer use

    Can you cut the cord on cable or scale back on an pricey cell phone plan

The Impact of Making Small Changes

Investors who makes $40,000 per year and increase their contribution rate from 4% to 6% could see a $39,000 increase to their retirement account over 20 years, while take-home pay would only decrease by $9,599.20!

Deferral percentage comparison
  4% deferral 6% deferral
10 years $24,392.80 $36,589.21
20 years $78,536.06 $117,804.08
30 years $198,714.59 $298,071.89
40 years $465,467.71 $698,201.57

Note: This example assumes a 25% tax rate and a consistent 8% rate of return. All numeric examples and any individuals shown are hypothetical and were used for explanatory purposes only. Actual results may vary.

Remember, it’s the little things you do now that will have a big impact in your retirement years. Review your accounts regularly, be patient, increase your contributions whenever possible and be consistent.

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1. What’s the Average 401(k) Balance by Age?,, Tim Parker, March 17, 2021.

Note: OneAmerica® is the marketing name for the companies of OneAmerica. Products issued and underwritten by American United Life Insurance Company® (AUL), a OneAmerica company. Administrative and recordkeeping services provided by OneAmerica Retirement Services LLC, a OneAmerica company, which is not a broker/dealer or investment advisor.

Provided content is for overview and informational purposes only and is not intended and should not be relied upon as individualized tax, legal, fiduciary, or investment advice. These concepts were derived under current laws and regulations. Changes in the law or regulations may affect the information provided. For answers to specific questions, please consult a qualified attorney, tax advisor, or financial professional.

Investing involves risk, including potential loss of principal.

The views and opinions expressed by Peter Dunn (aka Pete the Planner) are solely his and do not necessarily reflect the views and opinions of the companies of OneAmerica. Pete the Planner’s content is for overview and informational purposes only and is not intended as tax, legal, fiduciary, or investment advice. Pete the Planner is not an affiliate of any OneAmerica company.