Top 9 Ways to Save for Retirement
Updated on Mar 15 2018
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.
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. 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.
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.
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.
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. Make sure to educate yourself on your portfolio, the market and ask questions as financial security and knowledge go hand-in-hand.
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.
6. Put money into an IRA each paycheck
You can contribute up to $5,500 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.
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. Learn more about Social Security benefits and estimate your benefit by using the Social Security Administration’s retirement estimator.
8. Be aware of 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
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. 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.