What do YOU want to do?...
Why start now? Because the longer you put it off, the greater the distance between you and your goal. Before your Golden Years sneak up on you, take advantage of the ticking clock. When it comes to planning for retirement, time is your biggest ally. Here’s how to use it so you don’t lose it.
Contribute to your 401k at least to your employer's match
If your employer matches any portion of your 401k contributions and you're not maxing that option out, you are leaving free money on the table. Take advantage of this benefit at a minimum. Remember, the more you are able to contribute the better.
Save early and often
Don't miss out on the benefits of compound interest. A 21 year old who saves $3,000 per year until age 65 at 8% growth will have $1,156,517, while someone who waits until age 28 to save the same amount will only have $657,948, even though the first person only put away $21,000 more. Don't wait to start saving!
Throughout the course of this year...
Calculate how much you will need in order to retire
Retirement may be decades off, but you can still get a ballpark idea of how much you'll need using your current lifestyle expenses as a starting point.
Establish the proper retirement savings accounts
Once you've set yourself up with your employer-sponsored plan (if you have one) and are maxing out your contributions, consider starting an IRA or Roth IRA to save even more toward retirement.
Figure out how much extra you should be saving to retire at your desired age.
The amount you'll need in order to retire will depend on your retirement age, your life expectancy and your lifestyle costs. If retirement is still a futuristic dream for you, pick an age that you'd like to retire, then figure out how much you need to save each month from now until then to get there. Can't find that much money? Adjust your financial planning accordingly.
Set up automatic savings transfers
Don't wait to see if there is money “left over” each month, treat saving as another bill to make sure it happens.
Take a look at your other retirement income sources.
Will you be eligible for Social Security? Will you receive an inheritance someday? Are you a veteran? All of these and other income sources could potentially aid in your retirement plans, just make sure you don’t rely on them alone.
Throughout the years...
Keep your beneficiary designations current
When you establish retirement accounts such as a 401k or IRA, you are asked to name a beneficiary—that is, the person who would receive the account if something should happen to you. Make sure that the person you chose is still the person you'd want to receive the account as you go through life's changes. If you've gotten married, divorced, had children or lost family members, you may need to change your beneficiaries to stay current with your wishes.
Make sure your accounts are invested appropriately
Proper diversification and asset allocation will help to secure long-term growth for your savings. Revisit and rebalance at least annually, if not quarterly.
Revisit the calculation of what you'll need at least annually
A retirement plan is an ever-changing roadmap and should be adjusted for any major life changes or, at the very least, annually to account for current savings amounts, rates, etc. Make adjustments for any shortfalls as they show up.