Saving for retirement remains one of the most critical financial strategies, especially amid ongoing global economic uncertainty and rising retirement age projections in many countries. In 2025, with inflation beginning to stabilize after the 2022–2023 global surge and interest rates remaining relatively high in many markets, the ability to allocate long-term savings has never been more important.
The good news? Most employees in formal sectors — both civilian and military — receive annual pay raises based on years of service. This is a strategic moment to reassess your retirement planning. Rather than viewing the raise as purely an opportunity for increased spending, it can be a powerful tool to reinforce your financial foundation for the future.
Turn Pay Raises Into Retirement Security
Psychologically, most individuals adjust their lifestyle to match income increases — a behavior known as lifestyle inflation. This means that every additional dollar earned is often followed by higher spending. To counter this, apply a pay-yourself-first strategy: before spending a dime of that raise, increase your retirement contributions.
For example, if you receive a 7% raise this year, consider boosting your retirement contributions by at least 3% and enjoy the rest without guilt. It’s a painless yet powerful move that can pay dividends in the long run.
Case Study: Behavioral Nudges in Military Finance
In 2020, the US Department of Defense conducted a behavioral finance pilot. Service members who were scheduled to receive a pay bump based on time in service were sent a simple email. The message reminded them of the upcoming raise and included the deadline for adjusting their Thrift Savings Plan (TSP) contributions via myPay.
The results were impressive:
- 64% more likely to increase retirement savings.
- 52% higher increase in contribution rates.
- Twice as likely to start contributing to the TSP if they weren’t already.
This study proves that timely nudges, combined with automated systems, can significantly influence long-term financial behaviors.
Why 2025 Is the Time to Rethink Your Retirement Strategy
According to the latest data from the IMF and World Bank, while global inflation is easing, monetary policy remains tight in many economies, including the US and Indonesia. As a result, personal saving rates are increasing, and awareness around emergency funds and retirement planning is at an all-time high.
Additionally, with global life expectancy projected to reach 74 years by 2025, it’s likely you’ll spend more years in retirement than previous generations. That means you’ll need more savings — not just to survive, but to thrive in your later years.
Use Digital Tools and Automation to Your Advantage
Saving for retirement has never been easier thanks to digital platforms and automation. You can leverage retirement-focused investment vehicles like 401(k)s, IRAs, or government-managed plans such as the TSP. Most platforms allow you to set automatic contributions, helping you build wealth consistently with minimal effort.
Pro tip: When you receive your annual raise or bonus, take five minutes to log into your payroll or investment portal and increase your contribution percentage. It’s a small action with long-term impact.
Turn Financial Momentum Into Long-Term Value
Annual raises are often overlooked opportunities. Instead of fully absorbing them into your lifestyle, redirect a portion toward your retirement. It’s a financially savvy decision that ensures peace of mind and financial independence later in life.
If now isn’t the right time to start saving more for retirement, then when is? Every extra dollar can — and should — work for your future. Use it wisely.
Disclaimer: The inclusion of academic research or references in this article does not represent the official position of any government agency and should not be interpreted as endorsement. For personalized financial guidance, consult a certified financial planner.
Randall Brown