The 1% difference:
Can you save more?

Would you be willing to bring your lunch to work once a week if it meant you could go out to dinner once a week in retirement? How about forgoing a movie night out if the savings could pay your monthly cable bill in retirement?

Putting just 1% more of your pay each month into the UC 403(b) or 457(b) plans could make a real difference in your ability to afford the retirement you want. And finding that additional 1% can be as easy as packing a bag lunch, adjusting your home thermostat, or having a stay-at-home date night once a month.

Thanks to the potential power of compound earnings and the tax advantages of qualified retirement savings accounts, a small step today can turn into a big stride forward tomorrow.

How big? Let’s look at two hypothetical investors. Both investors make a pledge to invest 1% a year more of their salary in their 403(b) plan until retirement at age 65. For illustrative purposes, we assume a 7% hypothetical annual rate of return.

Meet Maria and Steve

  1. Maria is 25 years old and earns $40,000 a year as a medical assistant. Eager to save more, Maria increases her contribution by 1%, for an extra $33 a month. That 1% change adds about $88,000 to her 403(b) plan balance by the time she’s 65. And that generates a potential $6,750 more in retirement income per year.
  2. Now consider Steve. He’s 35 years old and earning $60,000 as an accountant. Steve takes our 1% pledge and bumps up his contributions to $50 a month. By the time he retires at 65, Steve’s 1% increase adds about $61,000 to his 403(b) plan balance. And that generates a potential $4,700 more in retirement income per year.
  3. What to remember: Both stories show that even a small change can have a big impact. Of course, starting early gives Maria’s money more time to potentially grow. But Steve also benefits from the change. Thanks to the power of tax-deferred compounding, even a 1% increase can add up. 


Are you saving enough?

Are you on track to meet your retirement goals? Everyone’s situation is unique. Take time now to assess your own retirement readiness by getting your Retirement Readiness Score.

  • Log in to view the Retirement Review.
  • Under "Your Modeled Retirement Readiness Information," adjust your data and model the effect of different contribution rates.
  • Click "Save Session" to save your modeled scenario for future reference.

Stay positive

If you’re behind, don’t fret. Remember, planning for retirement is a journey. It’s a good idea to aim to save 10% to 15% of your income toward retirement, but few people get there overnight. The key is to start small and ratchet up your savings over time.

To find opportunities to save, consider keeping a one-month spending diary to track where your money is going. Create your own diary in a format that works for you, or search for expense tracking apps online. You may be surprised at what you find.