There are a few strategies that will help ensure you have the most successful retirement.

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The Top Line

• The idea of saving for retirement can be daunting, and many people procrastinate because it can seem like you’re planning for an event so far in the future.
• Starting early and saving consistently are two keys to a successful retirement plan.
• To get the best benefit, it’s critical to use tax savings and any possible match from your employer.

If you are getting started on saving for retirement, then you may be overwhelmed and feel like saving a large amount of money for retirement is impossible. Though it is a daunting task for some, the hardest part is starting. Once you find a plan that works for you in your retirement savings, it becomes an easy task. If you’re ready to find a plan that works for you and start aggressively saving for a retirement that you can enjoy, then follow these top 5 tips for saving for your retirement.

Start Early

One of the best things that you can do if you are trying to save for retirement and have a retirement that you can enjoy is to start as early as possible when it comes to saving. If you want to save $1 million by age 65, you would need to save about $4,500 a year if you start at age 20 and about $9,000 a year if you start at age 30. The earlier that you start saving, the less that you will need to save per year to reach your goal.

If you can start right away when you begin working, you can be several steps ahead of everyone else and if you do well enough with saving, you can even retire early. When you are young and while you have the chance, you should save as much as you can to increase the effects of investing over time.

Consistently Contribute

The next on the list of the top 5 tips for saving for retirement is to consistently contribute to your retirement accounts. It’s important that you not only start early in saving for retirement, but also that you stay on top of your savings goals and ensure that you are meeting them on a monthly and yearly basis. When you have consistency in your savings plan it can help to keep you motivated and organized, especially as you see your retirement savings balance go up exponentially as it earns gains from your existing contribution and also increases from your monthly contributions.

To help yourself stick to the goal of consistently contributing to your retirement, you should establish a dollar amount or percentage of your income that you wish to save on a monthly basis. You should aim to save 15 percent of your income toward retirement, but even if you aren’t able to save that amount to start with, just starting to save as early as possible will put you in a better position. The easiest way to do this is to have the savings automatically deducted from each paycheck so you aren’t tempted to spend the funds. This will help you take charge of the success that you have and make sure that you have a quantifiable goal that is binary whether you succeed or fail in achieving that goal. With constant contributions on a monthly basis and growth over time, you’ll put yourself in a great position for a successful retirement savings strategy.

Use Tax Benefits

If you’re ready to become more advanced in your strategies to maximize your success when saving for retirement, then one of the best strategies that you can use is to save with accounts that offer you a tax benefit. These can include accounts provided by your employer or ones that you open yourself.

About four-fifths of Americans work for an employer that offers a 401k plan, which employees use to save for retirement. Employers offer 401k plans using pre-tax dollars. This means that you don’t deduct contributions from your taxes. Instead, your employer doesn’t report your 401k contribution as income, which will still of course save you money on taxes. You will eventually pay taxes on the funds you withdraw from the 401k when you retire, but the idea is that your tax rate will be lower when you retire than when you work. The SIMPLE IRA is similar to a 401k plan except that it is offered by small businesses with 100 or fewer employees.

If your employer doesn’t offer a 401k or SIMPLE IRA plan or if you’d like to contribute more than the limits to the 401k or SIMPLE IRA, there are two other types of IRAs that you may open. Roth IRA accounts are designed for those who want to pay taxes now to avoid paying them later when they make withdrawals from their retirement account. This is the best option for you if you think that you will pay higher taxes when you retire than you do now either due to an increase in tax rates or an increase in your income. Traditional IRA accounts are for those who would rather deduct their retirement contributions now and pay taxes on their withdrawals in the future. By doing this, you can lower your taxable income now but you will have to eventually pay the taxes in the future.

You may also prefer to open a Roth IRA account instead because there isn’t an age that you are required to start withdrawing the funds like there is for the traditional IRA. Also, by paying the taxes on your contributions now instead of in the future, you won’t be tempted to spend the tax savings that you would receive from a traditional IRA now. Instead you will save those funds.

If you want to have the most success possible when saving for retirement, then it is important that you not only understand the tax laws that surround the topic of saving for retirement, but that you are able to use the various retirement accounts to your advantage.

Use Your Employer Match

One of the best tools that is available to you when saving for retirement is the match that may be provided by your employer when saving for retirement. For many people, this can range from 1% to 10%, but most often is about 3% to 5%. In essence, this is free money. If you can afford to contribute enough out of your paycheck to your retirement in order to get the match, it is highly recommended that you do so. The employer match is a major tool to get you closer to retirement at a much higher speed. You will be saving money now for a huge impact later. The employer match is free money that can make your window for retirement much closer, if utilized correctly. Not only should you utilize the employer match for your retirement contribution, but you should consider it as part of your compensation when applying for jobs in the future. It is definitely a very desirable benefit of any job and you should use it when it is available to its fullest potential.

Lower Expenses

What may have one of the largest impacts on your success when it comes to saving for retirement is not the contributions that you make to the retirement account, but the expenses that you’re able to lower. If you want to have a successful time in saving for retirement, then one of the best tactics that you can use is to lower the amount of expenses that you have as much as you can. More expenses mean that you will need more income from your investments to pay for your cost of living, so every dollar that you can lower from your cost of living will have a benefit. In addition, the money that you save by lowering your expenses can be contributed to your retirement accounts to save more for retirement.

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