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Automatic Increases Can Help Turbocharge Your 
Retirement Savings

If you’re already setting aside a portion of your paycheck for retirement, that’s something you’ll thank yourself for in the future. But depending on how early you started, you still might not be saving enough. Many financial professionals agree that workers should be saving at least 10%–15% of their pre-tax earnings to have sufficient savings for retirement. Now, that may seem like too much to take out of your paycheck all at once.

But what if there was a painless way to increase your savings gradually—so gradually, in fact, that you’d barely notice the impact on your take-home pay? Believe it or not, there is. Your employer’s retirement plan may offer a feature called auto-escalation. If so, taking advantage of this option is a great way to amp up your savings. Signing up for this one simple benefit could make a huge impact on how prepared you are for retirement.


Auto-escalation, or automatic contribution increases, are an easy way to automatically raise the amount you set aside each year in your workplace retirement plan. When you sign up, you pick your initial savings rate and the amount you want to raise your contributions each year, along with your target savings rate. For example, let’s say you want to initially contribute 4% of your pay into the retirement plan but, ultimately, you’d like to be saving 10% of your pay. Through the auto-escalation feature, you could start saving at 4% but elect to raise your contributions by 1% per year until you reach your savings goal of 10%.

A nice thing about auto-escalation is that it helps grow your savings rate slowly, in small increments, which gives you time to plan for the changes in your take-home pay. And if you get annual pay increases, they may more than cover the increased saving rate. What’s more, you don’t have to remember to increase your contribution every year because it’s automatically increased for you. Automatic contribution increases are also reversible. If you need to turn them off for any reason after signing up, you always have the option.


Do you think to raise your retirement plan contributions by 1% or 2% of your salary each year won’t make much of a difference in the amount your nest egg grows over time? Think again.  

ADI ImageExample:

Assume Mariah is 30 years old and earns $50,000 a year. She has an existing retirement plan account balance of $3,000, and currently sets aside 6% of her paycheck. If she keeps contributing 6% each year throughout her career and retires at age 67, she could accumulate about $667,112 in her retirement plan account (assuming a 7% annual rate of return and a 2% annual increase in salary). 

But look what happens if she raises her contributions by just 1% each year until she reaches 10% of her salary. Now, when she retires at age 67, she could have about $1,030,915 saved—$363,803 more—just by increasing her contribution rate a small amount for a few years! And this doesn’t even include any employer contributions she may be eligible to receive.

ADI Chart
Give your retirement a raise! 

As you can see, bumping up your retirement plan contributions adds up over time, and this simple strategy could make a significant difference in the growth of your retirement savings.


Auto-escalation is an easy way to help you accomplish your retirement goals. Log in to your account to find out if your plan offers automatic contribution increases, or call your Retirement Specialist at 1-800-854-0647 for assistance.

*Source: Retirement Account Contribution Accelerator.  KJE Financial Calculators,

The information provided is not written or intended as specific tax or legal advice. MassMutual, its subsidiaries, employees and representatives are not authorized to give tax or legal advice. Individuals are encouraged to seek advice from their own tax or legal counsel.

© 2018 Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111-0001.  All rights reserved.