What should I know to save for retirement?

Smart stuff to help male your dream retirement come true

When you picture retirement, what do you see? Feet up, relaxing on a beach with an ice-cold drink in your hand? Maybe that trip to Europe you could never find the time for? What might not immediately come to mind is the plan that’s going to help us make those dreams become a reality. That’s where we can help with a little know-how to make working toward that retirement a little easier.

Types of accounts

We need a place where we can put our money for retirement and hopefully watch it grow. Here are a couple options to consider:

  • 401(k) - This is one of the most common ways to save for retirement. Sponsored by your employer, 401(k) plans let you decide how much you want to automatically pull out of your paycheck (typically before taxes are deducted) and put in an investment account. Your employer might match a percentage of what you put in, sometimes as much as 100%, so make sure to take that into account and don’t leave free money on the table!
  • Individual Retirement Account (IRA) - Similar to a 401(k), you can contribute money to an IRA before or after your taxes are taken out of a paycheck. Unlike a 401(k), your employers do not make a matching contribution to this type of account.

You might also have a chat with your employer to see what other options they offer for retirement plans.

How much do I need?

In general, the recommended amount to have put away is enough to replace 80% of the yearly income you had right before you retired. You might need more or less, depending on what you want to do with all your new free time. To get a rough idea of where you want to be, check out our retirement calculator.

The power of three

The most important thing to know about getting to that ideal retirement is that you can do it. You just need to keep these three things in mind:

  1. Know where you stand - Know how much money you having coming in and going out, that way you know how much you can put toward these goals.
  2. Plan it out - Write down how much you’re putting away to reach your goal, and how often you’ll be doing it. It will make everything easier.
  3. Take small steps - Chances are when starting retirement savings, we’ll be a ways off from retiring. Don’t feel like you have to dump your whole paycheck into your retirement account - you can make progress little by little. And don’t forget to set milestones for yourself and celebrate when you hit those milestones. For more great help, check our Ruling Your Tomorrows e-book.

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