Saving for retirement can be a struggle. You might have many years left in your career, and it can seem almost impossible to save the necessary hundreds of thousands or even a million dollars. While a million dollars is still a lot of money, there are some simple habits you can start today that will help you save for retirement.
Everyone has different goals, of course, and you may not quite be aiming for a million bucks. Whatever dollar amount you have your sights set on, the basic principles for retirement savings are the same. Put the right systems in place, and you won’t even have to think about it very much.
Let’s dive into five simple, yet effective ways to get started on your retirement savings.
Start Investing at Work
For most of us, the first way to start investing is to do so at work. If your employer offers a retirement plan (or multiple plans), be sure to contribute to those plans monthly. Some employers may opt you in automatically, but double-check to ensure you are contributing. Retirement plans are tax-advantaged, so they will make your money go further.
Richard Tatum, president of retirement services at VestWell, recommends opening an IRA if you don’t have a 401(k) or a similar plan at work. “If your employer doesn’t offer one, ask your financial advisor about opening an IRA (individual retirement account), which is also a tax-advantaged retirement savings account, but it doesn’t require a company to sponsor the account to open one.”
Take Advantage of Employer Matching
Employer-sponsored retirement plans such as the 401(k) often come with employer matching, and that’s something everyone should maximize. No matter what your retirement goals may be, employer matching is one of the easiest ways to increase how much you save.
The way employer matching works is simple: any time you contribute to your retirement plan, your employer matches that contribution. There are usually limits on how much they will match and the percentage may be different in some cases, but you are guaranteed to have extra retirement savings if you take advantage.
“Employers will often match a certain percentage of your retirement plan contributions,” says Tatum. “Make sure you’re putting in enough to at least get the maximum they will contribute — it’s free money!”
Save Money Before Anyone Knows You Have It
Let’s face it: getting paid can be very exciting. You see your paycheck come through and you immediately start thinking about all the things you can buy with it. A new phone, some new clothes, or whatever it is that interests you. But if you never see that money come through, you’ll probably be less tempted to spend it!
“Try bumping up your 401(k) contribution by just $50 to $100 each paycheck,” says Paul Tyler, chief marketing officer at Nassau Financial Group. “If anyone is watching the bank deposits, they probably won’t notice. But you will be surprised even in the first year how much faster your account will grow.”
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