The Snowball Effect: How $50 Today Becomes Big Retirement Bucks Tomorow

Significant Impact Saving One Percent More Can Have on Retirement

BOSTON, February 27, 2015 – With millions of Americans increasingly responsible for their own retirement, many are grappling with how to build a nest egg that will last their lifetime.

When it comes to saving, it’s important for individuals to realize that a little bit today can go a long way tomorrow—which is why Fidelity Investments is encouraging people to save just one percent more of their salary annually. Launched in conjunction with “America Saves Week,” the “1% More” initiative highlights how small but meaningful steps can lead to better retirement outcomes.

For a household making $60,000, one percent equals $50 a month. When you take into account the impact of compound interest and market growth potential, saving $50 more today could translate into an additional $270 of monthly retirement income. However, many people underestimate the difference saving one percent more of their salary can make in their retirement savings.

America Saves

According to Fidelity Investments’ “America Saves” poll, individuals were asked how much $50 a month would amount to if they saved and invested it over a 25 year period. The median response was $17,000—far lower than the estimated amount of more than $40,000ii. But when respondents were told the estimated amount their money could grow to, 74 percent of those still working and saving said knowing that made them more likely to save more, and 82 percent of retirees said they would have saved that much if they had knowniii.

“Saving for retirement is like training for a marathon – a solid plan with incremental increases along the way is key to crossing the finish line,” said Jeanne Thompson, vice president at Fidelity Investments. “We suggest that savers put away at least 10 to 15 percent of their pay annually, including employer contributions. But if you can’t save this much from the get go, start by saving up to the company match and then increase by one percent every year until you hit this savings goal.”

Separate Fidelity analysis of its 401(k) data revealed that 1.4 million savers nationwide increased their savings rate in 2014—with the average savings increase representing about 4 percent of their payiv. This equated to thousands of extra retirement dollars in individuals’ retirement plans.

The good news is that saving an extra one percent of salary isn’t viewed as a hardship by most savers. According to Fidelity’s poll, a clear majority of those still working and saving indicated they’d be willing to make minor sacrifices to improve their chances for a better tomorrow. In fact, 81 percent would be willing to bring lunch to work once a week if it would allow them to eat dinner at a restaurant one evening a week in retirement, and 72 percent would be willing to give up going to the movies one night each month if the savings could pay for their monthly cable bill in retirement.

saving $50 more today could translate into an additional $270 of monthly retirement income

“People often grow complacent when it comes to saving for retirement, thinking they’ll have to make sacrifices that will impact their quality of life,” said John Sweeney, executive vice president at Fidelity. “The truth is there are many things you can do now for your retirement that doesn’t involve much sacrifice at all and can help you get better prepared. When one considers that today’s retirement often lasts 30 or 40 years, it’s important to take action to make sure you can go the distance—even if it’s just one percent at a time.”

Harnessing the Power of One Percent More

For those interested in increasing the amount that they are saving—be it one percent or more—Fidelity offers a variety of helpful resources:

  • Educational Fidelity Viewpoints® articles, including “Just One Percent More Can Make a Big Difference,” which provides examples of the impact one percent can make, ways to save and video content.
  • An infographic illustrating the impact that one percent more can have on retirement can be found here.

Follow Jeanne Thompson on Twitter at @Jeanne_Fidelity and John Sweeney at @SweeneyFidelity. For additional savings tips, Fidelity will be sharing one tip an hour for 100 hours during America Saves Week on Twitter and encourages people to share their tips too using #save1more.


About Fidelity Investments
Fidelity’s goal is to make financial expertise broadly accessible and effective in helping people live the lives they want. With assets under administration of $5.1 trillion, including managed assets of $2.0 trillion as of December 31, 2014, we focus on meeting the unique needs of a diverse set of customers: helping 23 million people investing their own life savings, 20,000 businesses to manage their employee benefit programs, as well as providing 10,000 advisory firms with technology solutions to invest their Fidelity Investments America Saves Week/ Page 3 own clients’ money. Privately held for nearly 70 years, Fidelity employs 41,000 associates who are focused on the long-term success of our customers. For more information about Fidelity Investments, visit