Simple Steps for Stress-Free Saving
According to a 2022 study, Generation Z (ages 18 to 25) is saving an average of 14% of their pay. Millennials (ages 26-42), Gen Xers (ages 43-55) and Baby Boomers (ages 56-75) are saving an average of 12%. What’s your magic number?
The Sooner the Better: the Power of Compounding
Most experts estimate that you’ll need to replace about 80% of your pre-retirement income in retirement. Put time on your side; start saving early.
The earlier you start saving, the more time your money has to grow. When that interest starts earning interest (called compounding), your savings will get a big boost.
This example shows the power of compounding.
Sara makes $35,000 a year (before taxes).
She decides to save 3% of her salary a year, or $40 per biweekly pay period.
Let's assume she receives 2% pay increases a year and gets a 6% annual rate of return on her investments.
The chart shows how much Sara will have in her account at age 65 if she starts saving at age 30 ($158,211) versus waiting until age 40 ($73,767) to start saving.
Time is money! By waiting 10 years to start saving, Sara missed out on more than $84,000 of additional savings and growth.
Bottom line: saving early pays off.
Every Little Bit Helps
You know you need to save. Exactly how much should you save? Experts suggest saving about 10% to 15% of your pay a year.
If that amount seems a little daunting, start where you can. Follow these tips.
Don't miss out on the match. After you complete one year of service, you are eligible for Conduent matching contributions on future contributions you make to the Conduent Savings Plan. The match is discretionary and will range from 0%-4% based on the company’s financial performance. Conduent does not match catch-up contributions or rollover contributions. Conduent calculates your match amount each pay period and credits matching contributions to your account in the following year, as long as you are employed by Conduent on the last day of the prior year. To be eligible for the annual match, you must:
Have made eligible pre-tax and/or Roth contributions on any pay date during the Plan Year, and
Be employed on the last business day of the Plan Year unless you terminated during the quarter due to disability, retirement or involuntary termination due to corporation disposition or reduction in force.
For example, you have been working at Conduent for five years and are contributing to the Savings Plan in 2024. You are employed on Dec. 31, 2024. When Conduent announces the 2024 matching contribution percentage in 2025, we will credit your account with any applicable matching contributions for 2024. For example, if you leave Conduent on Dec. 1, 2024, you will not receive the matching contribution for 2024 unless you terminated employment due to one of the reasons stated above.
Gradually save more. Increase your contributions by 1% to 2% each year.
Don’t miss opportunities to save more. Getting a pay raise or finally paying off that loan offers the perfect time to increase your contribution rate.
Don’t Be a Front Loader: Maximize Your Contributions and the Conduent Match
Front loading to the Conduent Savings Plan is where you make your total contributions to the plan early in the year. For example, John is eligible for the Conduent matching contribution, which is calculated on a per-paycheck basis. Based on the IRS saving limits, he maxes out his contributions to the Conduent Savings Plan in June. His contributions will stop for the remainder of the year. When the match is paid the following year, he will receive matching contributions calculated through June but will receive no matching contributions from July to December since he was no longer contributing. John is front loading his contributions.
Think twice before you “front load.” If you front load your contributions and reach the IRS saving limits before the end of the year, you will no longer receive the match. You must be contributing to the plan in order to receive the match for the remainder of that year. Optimize the timing of your contributions from January to December so that you don’t miss out on the match throughout the year.
Take a look at this example.
Assume you earn $35,000 a year (before taxes). You begin saving at age 30, get salary increases of 2% each year and earn a 6% return on your investments.
The chart shows how much money you would have if you continued to save 3% a year and increased your contribution rate by 1% each year until you were contributing 10% of your pay.
By increasing your contribution rate gradually, you more than double the savings you’ll have at age 65.