On Track For A Secure Retirement? Do These Three Things

I’m in my mid-30s and have already saved enough to be well on my way to a secure retirement. I even think I’m far enough ahead so I can, and maybe should, reduce risk by investing less aggressively. But I don’t want to screw things up. Any suggestions for people who have started out well and don’t want to worry about planning for retirement as much? –B.P.

Kudos for getting a leg up on your future financial security. You stand as a shining example to retirement savers everywhere of how early and diligent saving can put you ahead of the game.

But while getting off to a great start certainly gives you more leeway in how you prepare for retirement going forward, at your age you don’t want to make the mistake of presuming you’ve got this retirement thing licked and can begin coasting into a comfy post-career life.

Any number of disruptions could cloud your retirement prospects over the course of the next 30 years. Market setbacks can put a big dent in your nest egg or future returns might be much weaker than in the past (as a recent McKinsey report warns.) And although you’ve been a diligent saver to date, a job layoff could knock you off your savings regimen and perhaps even force you to dip into your savings stash.

All of which is to say that I wouldn’t be too quick to assume that it’s okay to switch from offense to defense. Instead, I suggest you look at your situation a slightly different way — namely, considering ways to take advantage of the safety margin you’ve managed to build to date, while at the same time ensuring you keep your momentum going.

Here are three ways to do that:

1. Keep saving, even if at a somewhat slower pace. If you’re as far ahead on the savings front as you imply, that likely means you’ve been saving like a demon from the time you started your career. So you might want to (and can probably afford to) lighten up a bit on the savings front, especially if other obligations (kids’ education expenses and what not) begin to place a greater demand on your income at this point in your life.

But you don’t want to loosen the reins too much. As a general rule, I’d say you probably ought to keep your savings rate in the neighborhood of 15% or so a year. Go much below that and you could begin chipping away at your safety margin.

For a quick sense of how changing your savings rate might affect your retirement security, go to this calculator. You can then plug in different savings rates and see how each affects your chances of staying on track to a secure retirement.

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