Retirement Savings

When a person chooses to leave the workforce, it is important to plan for your retirement. Whether you invest your money or just put a little away each week, the best way to lift your savings is to cut spending on nonessential items and services. It doesn't matter whether you're 20 or 60, if you're getting a late start, you need to figure out how to boost your account balance as quickly as possible.

Setting goals can get you motivated to save because with your first pay-slip comes the question of what to do about savings. Although, the concept of full retirement is being able to permanently leave the workforce in old age is relatively new, and for the most part only culturally-widespread in first-world countries. Many developed countries have some type of national pension or benefits system (i.e. the United States' Social Security system) to help supplement retirees' incomes.

However, the age to get full retirement benefits from Social Security is moving higher. Someone who is 66 years old today can get full benefits. But full-retirement age will move up slowly, beginning with people born in 1955, until it hits 67 for people born in 1960 and later. Therefore, the retirement goals can be motivation to stay on track with savings.

How to start your Retirement Savings

There are few things which you need to know about saving for life after you stop working and getting on the path toward a comfortable retirement, no matter your career or the size of your pay-check.

• Start Early: The best day to start saving is today, even if you can save only a little bit. For instance, if you start saving at age 35, you’ll have to put away 16.6% of your income for 30 years to retire well at 65, according to research by Wade Pfau, professor of retirement income at the American College. Begin at 30, and your target drops to 12%. At 25, a steady 8.8% a year until 65 is enough, including the match.

• Create a budget: Once you know how much you should be saving, you need to determine if and how to afford that amount. That means drawing up a budget and figuring out how retirement savings fit into the big picture. However, sometimes budgets look good on paper, but don't work in real life. Then it is better to use some budget calculators for your help so that you can see where you are overspending and make changes as needed.

• Find strategies to stick to your budget. Tracking software can identify leaks in a budget, but it's up to you to figure out how to plug them. Another strategy may be to keep extra cash or savings in accounts that can't be conveniently accessed. A temporary part-time job or side gig may also prove to be enough to get your budget and retirement savings on track.

• Understanding Your Investment Account Options: Now that you’ve made the right choice in deciding to save for retirement, make sure you are investing that money wisely. You can also can pick stocks or mutual funds (which are collections of stocks, bonds or both) that will do better for you savings in future. 

• Redirect bonuses, raises and tax refunds to savings: A simple way to kick-start retirement savings is to send money from a bonus, raise or tax refund to a 401(k) or IRA. That money isn't part of the budget, so it shouldn't be missed. 

However, with 401(k)’s, there may be limits to the amount you can deposit in an I.R.A. each year, and the annual cap may depend on your income and other circumstances. Another variation on the I.R.A is a S.E.P (which is short for Simplified Employee Pension), and there is also a Solo 401(k) option for the self-employed. They came with their own set of rules that may allow you to save more than you could with a normal I.R.A.

Another option is, setting up automatic savings from your pay-check as it’s easy to forget about it. But, if you can spare an hour every year to check in on your accounts, you can ensure that you’re doing the best you can with your well-earned money.