The Best Ways to Save for Retirement
Updated on Jun 03 2019
It’s no secret that Americans are largely unprepared for retirement. Nearly half of all workers in the United States have not started saving for retirement, and 38 percent of those that have started saving have less than $10,000 saved. The good news is that it’s never too late to start saving for retirement and the best time to start is now.
Here are six ways to proactively and strategically plan for your retirement.
1. A little goes a long way - start today.
There’s no bad time to start saving for retirement but the earlier you start, the better off you’ll be. Start saving and investing as much as you can now and let compound interest work in your favor. Saving a small amount earlier will have a greater impact on investment results than investing a large lump sum for a shorter period of time later in life. It’s okay to start small, just start now.
2. Develop (and stick to!) a budget.
One of the best ways to save for retirement is to practice self-control now. Taking the care now to live within a monthly budget will pay dividends later. Create a monthly budget that incorporates savings and stick to it. Avoid credit card debt and taking on any other unnecessary debt. Live within your means and contribute regularly to investment accounts to build retirement savings.
3. Increase savings with every increase in pay.
Every time you receive a raise, increase contributions to your retirement account before increasing your level of spending. This is a simple and effective way to boost retirement savings while still enjoying a pay raise. For example, if you receive a 5 percent pay raise, increase 401k retirement plan contributions by 2 percent.
4. Meet employer matches to your 401k.
Many employers have matching contributions to 401ks but studies show that at least 20 percent of 401k plan participants do not contribute enough to receive all the matching contributions from their employer. Ask your human resources or benefits department about any matching programs your company offers and take full advantage of them. This is a simple and risk-free way to save for retirement and the additional funds can have a profound impact on financial success later in life.
5. Pay yourself first.
It’s easier to save the money if you never see the money. Ask your financial institution about taking money out of your checking account and into your investment account automatically. This will negate any temptation to spend your savings instead of putting it in its appropriate account.
6. Contact a financial advisor.
No matter where you are in your retirement plan, a fiduciary financial advisor can help you reach your retirement goals. They have expert knowledge on retirement planning milestones and can help you understand where you are now and what you need to do to get where you want to go. Working closely with a fiduciary financial advisor means that someone else has your best interests in mind, holding you accountable and giving your plan the structure and attention it needs for future financial success.
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