Top 9 Ways to Save for Retirement

Financial security doesn’t happen overnight. Diligent retirement planning, goal commitment and conscientious saving are all contributors when it comes to saving the ‘right’ amount of funds for retirement. And the best way to help achieve financial security is to start saving as early as possible in your working life.

According to the United States Department of Labor, fewer than half of Americans have calculated how much they need to save for retirement. The Employee Benefits Security Administration also reports that despite the fact that the average American spends 20 or so years in retirement, 30 percent of workers in 2015 did not participate in their retirement contribution plan offered by their business. This is a startling statistic, considering that the sooner you start saving for retirement the more time your money has to grow. It’s important to make sure you’re fiscally prepared for your future so that you can not only retire when you want, but also have enough money to enjoy your retirement.

There are a few key ways that you can start saving for retirement, whether you’re just starting out in your career or you’re a few years away from hanging up your work hat for good. Here are the main steps you need to take to be successful when it comes to saving enough funds to cover expenses, and entertainment, for the remainder of your life:

1. Set financial saving goals—and stick to them

If you are already saving for retirement or other short- or long-term goals, keep the habit going. If you’re not saving, there’s no time like the present to get into your financial groove. Even if you’re approaching retirement within the next ten or so years, the sooner you start saving, the more time you’ll have to grow your assets.

Take our financial goals assessment to get started on the right financial-planning path.

2. Properly assess your retirement needs

Retirement is expensive. You should try to budget for your current spending behavior plus some extra as you’ll have more time on your hands to splurge on entertainment and travel. After all, you’ll want to maintain your standard of living, but you’ll also have to factor inflation into your retirement budget.

A good way to start is by using a retirement calculator to assess how much you should have saved by the time you retire. You can also speak with a financial advisor about your retirement needs and whether you’re on track to reach your targets.

Contact a senior financial advisor to help you assess your retirement needs.

3. Contribute to your employer’s retirement savings plan

If your employer offers a retirement savings plan, such as a 401(k) plan, sign-up and contribute as much as you can as this is ‘free money’ that will increase exponentially over time. Your taxes will be lower, your company will contribute a designated percentage and automatic deductions from your paycheck make saving easier. Compound interest and tax deferrals will help you accumulate a bigger retirement nest egg.

Some companies will offer to match a designated percentage of employee contributions, so this is another way to get ‘free money’ towards your retirement. Employers often view this as an investment in employee retention, so it is usually in their best interest to consider offering a retirement savings plan.

If your company doesn’t currently offer a retirement savings plan, ask them to consider starting one as there are a number of retirement saving plan options available that could benefit both of you.

4. Consider basic investment principles

A balanced retirement portfolio can help you prepare for your future. Every person has a unique situation and their mix will vary from conservative to risky investments, depending on their age, income and a number of other variables. A diversified portfolio will help you reduce risk and improve return, but your mix may change over time as you prepare for retirement. You may want to consult with a financial advisor to get started on the right path. Make sure to educate yourself on your portfolio, the market and ask questions as financial security and knowledge go hand-in-hand.

As you get older, it’s important to reevaluate your insurance coverage to make sure it still meets your needs. If you have health insurance through your employer, you may want to consider switching to a private plan. You may also want to purchase long-term care insurance, which will help cover the costs of extended care in a nursing home or assisted living facility.

Learn more about popular senior investments and what may work best for you.

5. Don’t touch your retirement savings

If you withdraw retirement savings too early, you’ll lose principal and interest and you may lose tax benefits or have to pay withdrawal penalties. If you change jobs, leave your savings invested in your current retirement plan, whether that’s a 401(k), 403(b) or other, roll them over to an IRA or your new employer’s plan.

If you have a regular savings account, consider where those funds could grow in a retirement savings plan; whether it’s through a retirement account or through investing. As you get closer to retirement, you’ll want to take a more active role in monitoring and managing your investments. Reviewing your accounts regularly can help ensure that your asset allocation is on track and that you’re not taking on too much risk as you approach retirement.

6. Put money into an IRA each paycheck

As of 2022, you can contribute up to $5,5006000 a year into an Individual Retirement Account (IRA), and even more if you’re 50 or older. IRAs are a great option for retirement savings as they provide tax advantages and an easy way to save. If you have an employer-sponsored retirement plan, you may also be able to roll over money from that account into an IRA.

There are two types of IRAs: traditional and Roth. With a traditional IRA, you get a tax deduction for your contributions, but you pay taxes on the money when you withdraw it in retirement. With a Roth IRA, you don’t get a tax deduction for your contributions, but the money grows tax-free and you don’t have to pay taxes on it when you withdraw it in retirement.

You can open an IRA at most financial institutions, including banks, credit unions, and investment firms. Learn more about the different types of IRAs, including Roth IRA and traditional IRA.

7. Be aware of your Social Security benefits

Social Security pays benefits that are on average equal to about 40 percent of what you earned before retirement. If you retire at age 62, your benefits will be permanently reduced by about 30 percent. Full retirement age is currently 66 and is gradually rising to 67. If you can wait until 70 to start collecting, your benefits will increase by about 8 percent per year.

There are other factors that can affect how much you’ll receive in Social Security. Learn more about Social Security benefits and estimate your benefit by using the Social Security Administration’s retirement estimator.

8. Be aware of otherUnderstand other benefits offered by the government

From health care needs to financial or long-term care resources, there are wonderful benefits to help seniors fund retirement through the government or private organizations. Review the type of supplemental health care coverage that might be available to you. Get more information on Medicare, Medicaid and Long-Term Care Insurance. Also, take advantage of the many tax breaks for seniors, like the Senior Citizen Homeowners’ Exemption, which can lower your annual property taxes.

Read about government resources and other senior benefits .

9. Consider expert help

Even if you manage all your finances yourself, it’s always a good idea to check in with an expert financial advisor for money-saving and investment tips that are catered to your individual needs. If you have a lot of assets or if you’re nearing retirement, you may also want to consider hiring a professional to help you with estate planning. Local financial advisors can help you optimize your investment portfolio and plan for the challenges of retirement.

Contact a local financial advisor to gain insight into your retirement savings potential.