As you approach the midpoint of your career, you are getting close to the years in which you have the potential to earn the highest income. But, as your income has increased, so have your expenses. Set a plan to make sure that none of your goals get shortchanged.

Should I continue to save at the same rate in the Savings Plan?

You may think that you can’t afford to save more for retirement. It may take all you earn just to meet your current expenses. Even so, consider saving 1% or 2% more than you currently save in the plan. Think it won’t make a difference? Let’s look at a couple of examples. (Please note these illustrations are hypothetical and do not represent the performance of any particular investment. Your results may be better or worse.)

Rachel and Rick start saving in the plan in the middle of their career (at age 45), but Rick tries to make up for that by increasing the amount of his contribution each year. Rachel’s starting salary is $40,000 at age 45, she gets a 3% raise each year, and she contributes 6% of her salary to the plan for 20 years. She earns an average of 8% per year from her investments in the plan. When she retires at age 65, she will have approximately $142,000. Like Rachel, Rick’s starting salary is $40,000 at age 45, he gets a 3% raise each year, and he starts with a contribution of 6% of his salary. Rick, however, increases his contribution by 2% each year until he reaches 12%. By contributing an additional 2% each year, Rick will be rewarded with an additional $122,000 in the plan when he retires at age 65, for a total of $264,000.

Should I invest any of my Savings Plan assets in bond funds?

Keep in mind that you have a long time to go before using the money you are investing for retirement, so you can probably continue to absorb some risk. At this stage, you may choose to continue investing primarily in stocks but also increase your bond holdings for added stability.