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6 Proven Habits for a Financially Secure Retirement
Summary
Not sure how to plan for a financially secure retirement? These six steps can help, no matter your age or financial situation.
Planning for a secure retirement requires intentional actions and consistent effort. However, many Americans face challenges in achieving their financial goals, and it’s no surprise that 39% of working households are at risk of being unable to maintain their standard of living in retirement, according to Boston College’s National Retirement Risk Index.1
The good news? You can follow six clear steps successful savers use to get on track for a financially secure retirement, no matter your age or financial situation.
1. Start saving early and maximize compound growth
One of the most impactful habits of successful savers is starting early. By saving consistently over time, you leverage the power of compound interest. Investment gains grow exponentially when reinvested, building wealth faster. The higher your starting amount and the higher your investment return, the faster your savings compound. And over time, the savings can seriously add up. If you’re starting later, don’t worry – consistent contributions still have a meaningful impact.
Source: Schwab Center for Financial Research. This chart shows the outcome of saving $5,000 per year for 40 years. Savings are assumed to be placed in a hypothetical portfolio that earns 6% per year. Taxes and fees have not been considered in this analysis. Including them will impact the ending value. This is a hypothetical example for illustrative purposes only. The actual annual rate of return will fluctuate with market conditions. Investing involves risk, including loss of principal.
2. Make saving a priority
Successful retirement savers treat saving like a fixed expense, automating contributions to retirement accounts to ensure consistency. They prioritize future security over non-essential spending, often increasing their contributions by 1–2% annually to maximize growth without significantly affecting their current budget.
3. Diversify savings and income sources
To minimize risk and optimize growth, successful savers use multiple accounts, such as workplace retirement plans, individual retirement accounts (IRAs), health savings accounts (HSAs), and emergency funds. They also invest in passive income opportunities, like dividend-paying stocks or rental properties, to build additional streams of income beyond employment.
4. Avoid high-interest debt and plan for emergencies
Carrying high-interest debt can derail even the best financial plans. Focus on paying down debt while maintaining an emergency fund of three to six months of expenses. This helps avoid dipping into retirement accounts for unexpected costs.
5. Stick to a long-term strategy
A long-term perspective is crucial for financial success. Resist the urge to time the market or withdraw funds prematurely. A steady, disciplined approach to saving and investing builds resilience and ensures you stay on track toward your goals.
6. Build a comprehensive financial plan
A tailored financial plan provides clarity and direction for your retirement journey. Partnering with an advisor can help you refine your strategy, monitor your progress, and make adjustments as needed.
Planning for retirement requires careful consideration and strategic planning. Learn how Mercer Advisors can work with you to create a retirement plan that helps you achieve your long-term goals. Not a Mercer Advisors client but interested in more information? Let’s talk.
1 Yin, Yimeng, et al. “The National Retirement Risk Index: An Update from the 2022 SCF.” Center for Retirement Research at Boston College, Boston College, 27 February 2024.
Mercer Advisors Inc. is a parent company of Mercer Global Advisors Inc. and is not involved with investment services. Mercer Global Advisors Inc. (“Mercer Advisors”) is registered as an investment advisor with the SEC. The firm only transacts business in states where it is properly registered or is excluded or exempted from registration requirements.
All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change. Some of the research and ratings shown in this presentation come from third parties that are not affiliated with Mercer Advisors. The information is believed to be accurate but is not guaranteed or warranted by Mercer Advisors. Content, research, tools and stock or option symbols are for educational and illustrative purposes only and do not imply a recommendation or solicitation to buy or sell a particular security or to engage in any particular investment strategy. For financial planning advice specific to your circumstances, talk to a qualified professional at Mercer Advisors.
Past performance may not be indicative of future results. Therefore, no current or prospective client should assume that the future performance of any specific investment, investment strategy or product made reference to directly or indirectly, will be profitable or equal to past performance levels. All investment strategies have the potential for profit or loss. Changes in investment strategies, contributions or withdrawals may materially alter the performance and results of your portfolio. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for a client’s investment portfolio. Historical performance results for investment indexes and/or categories, generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment-management fee, the incurrence of which would have the effect of decreasing historical performance results. Economic factors, market conditions, and investment strategies will affect the performance of any portfolio and there are no assurances that it will match or outperform any particular benchmark.
This document may contain forward-looking statements including statements regarding our intent, belief or current expectations with respect to market conditions. Readers are cautioned not to place undue reliance on these forward-looking statements. While due care has been used in the preparation of forecast information, actual results may vary in a materially positive or negative manner. Forecasts and hypothetical examples are subject to uncertainty and contingencies outside Mercer Advisors’ control.
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