What Is a Nest Egg and How Can You Build One?

A nest egg refers to the savings and investments set aside specifically for retirement, providing a financial foundation for your later years. These assets can be invested in a way that helps ensure a stable and reliable income throughout retirement.

Here are some  strategies to help you build your own nest egg:

Avoid Credit Card Debt: Pay off your credit cards regularly. With interest rates between 20% and 30%, carrying a balance can erode your savings and investments faster than they grow.

Maximize Tax-Deferred Retirement Accounts: Contribute as much as you can to retirement accounts like 401(k)s or IRAs. This allows your money to grow without being taxed until you withdraw it.

Start Saving for Retirement Early: Even if you feel it’s too late to begin, start saving now. The sooner you start, the more time your money has to grow.

Take Advantage of Employer Matches: If your employer offers a retirement account match, contribute enough to get the full benefit. It’s essentially free money.

Be Cautious with Employer Stock: If your employer offers stock options, consider them but avoid investing too much of your retirement funds in your company’s stock. Diversification is key to reducing risk.

Roll Over Retirement Funds: When changing jobs, transfer your retirement funds directly into a tax-deferred account instead of cashing out. This avoids potential tax penalties and keeps your savings growing.

Avoid Hardship Withdrawals: Try to avoid taking withdrawals or loans from your retirement funds unless absolutely necessary. This can hinder the compounding growth of your savings.

Increase Savings with Raises: Whenever you receive a salary increase, consider boosting your retirement savings proportionally.

Benchmarks for Success:

Aim to save at least 10% of your annual income for retirement.

Strive to accumulate a nest egg that is 10 times your annual salary by the time you retire.

By following these guidelines, you can build a solid nest egg and help ensure a more confident financial future.

Investment advisory products and services made available through AE Wealth Management, LLC (AEWM), a Registered Investment Adviser. Bradshaw & Weil, Inc. is not affiliated with the U.S. government or any governmental agency. 02533669-08/24