- Francesca Sacco
Six Tips to Remember as You Start Saving for Retirement
It’s never too early to start saving for retirement. It’s also never too late—even if you have your sights set on retiring in the near future.
No matter where you’re at in your career or how long you have until you retire, a commitment to saving now will pay dividends later in life. As you start saving for retirement, make sure you’re doing everything you can to fund a better life for yourself once your working days are over.
Here are six tips to help you achieve the retirement of your dreams.
1. Build savings into your monthly budget.
The most successful retirement savings efforts treat saving like any other bill. If you make retirement contributions through your employer, have these contributions deducted from your paycheck so you aren’t tempted to spend the money before you can save it.
For other retirement savings efforts, make contributions to a savings account or other retirement products on a regular schedule every month. Treat this like a nonnegotiable bill to ensure you stick to your savings plan.
You can maximize savings through a standard savings account by seeking out the highest interest rate for these savings. The interest rate for credit union savings accounts often surpasses the savings rate offered by traditional banks.
2. Tie savings to long-term retirement goals.
The amount you need to save for retirement is largely based on your retirement goals, including your targeted retirement age and your projected spending in retirement.
Establish these goals to get a better sense of how much you need to save. A financial advisor or other financial planning expert—who you can find through your local credit union—can help you understand how much you need to be saving to reach these goals.
3. Take advantage of savings vehicles that offer matching opportunities.
Your employer’s 401(k) might offer matching bonus contributions as a percentage of your annual income. This matching amount is essentially free money that goes directly into your retirement fund.
If possible, contribute enough to these accounts that you can claim the full employer match, thus maximizing the additional contributions made to your account.
4. Automatic savings can help establish a savings habit—and keep your savings on schedule.
Struggling to make savings contributions on your own? Automated transfers can help enforce a regular savings schedule as you build up a savings habit.
This automated approach is great for people who have a habit of spending whatever money lands in their bank account—and you can even automate contributions to multiple accounts and increase contributions as you get comfortable with this process.
5. Dedicate raises and other income increases to your savings goals.
As you receive income increases through pay raises, new jobs or even additional income earnings, take a deep breath before you increase your spending and adopt a more lavish lifestyle.
Instead, consider taking that money and putting it toward retirement savings, thereby increasing your monthly contributions. If your savings and retirement accounts are managed through your credit union, you might also benefit from lower fees and higher dividends than what other financial advisors and investment management companies may offer.
6. As your savings grow, diversify your retirement portfolio.
When you’re first getting started on saving for retirement, you might focus on basic savings tools such as your employer’s 401(k) as well as the higher dividend savings accounts and cost-efficient fee schedules for savings vehicles offered by your credit union.
Your credit union likely offers a number of different account types—from regular savings accounts to money market accounts to individual retirement accounts (IRAs)—that each surpass their bank-offered counterparts by offering lower account management fees and higher dividend payments.
Money market accounts, taxable investment accounts and other savings vehicles will work together to stabilize your retirement through a wide range of potential income streams.
Your retirement plan starts today.
When retirement seems like a long way off, consumers can get lulled into a false sense that they’ve got plenty of time to spare. But the longer you wait to make retirement savings contributions, the less you’ll ultimately have at your disposal in these golden years.
Don’t delay in taking advantage of these competitive savings tools. Open a free checking account today and start exploring your different options to save toward your retirement goals.