If you’ve fallen behind on your retirement savings, don’t sweat it. There are steps you can take to get on track.
As You Look Toward Retirement, Keep Your Goals in Mind
It’s important to save for retirement throughout your life, but a reminder once in a while never hurts. The third week of October, National Save for Retirement Week, which was established back in ’06 as a way to inform employees about 401(k)s and retirement, serves as that reminder.
In that spirit, we want to offer some ideas to help you get on track with retirement savings, or to stay on track if you’ve already begun.
Create a Plan
As with most efforts to achieve important goals, it can be helpful to have a plan in place for your retirement investing.
“Having a plan is a key piece of your retirement strategy,” said Joe Correnti, senior vice president of brokerage product at Scottrade. “Without a solid plan in place, it can be difficult to stay on track with your goals and save enough to be sure you’re comfortable during retirement.”
If you haven’t put together a retirement savings plan or just want some ideas for your existing one, consider the following:
- Start as soon as you can. An earlier start can help you reach your goals more quickly.
- Live within your means. This means different things to different people, but the most direct way to reach your retirement goal is to save as much as you can by keeping your spending as low as possible.
- Contribute Consistently. Regular additions to your investment accounts help get you into the habit of saving. Rather than making large, lump-sum deposits, you could set up regular payroll deductions to your 401(k) or make regular, periodic contributions to your IRA.
The Sooner, the Better
Time is a big factor in saving for retirement, which is why we’re emphasizing it. The more time you invest, the longer that compounding interest can work in your favor. Also, starting when you’re younger gives you more of a safety net in case a big life event comes your way – or gets in the way of your plan.
“Getting an early start is a big advantage for retirement savings,” said Joe Correnti, senior vice president of brokerage product at Scottrade. “The earlier you start, the more time you have to save to ensure a comfortable nest egg in the future. It can also be less stressful, as you can save smaller percentages of income if you start when you’re young.”
Fortunately, for those who got a later start, there are catch-up rules for IRAs and 401(k)s that allow you to contribute more each year while retaining the tax benefits.
Explore Your Options
Knowing the options you have for saving will likely play an important role in your plans. Some questions you may want to consider are: Do you have a 401(k)? Does your company offer a match? What IRAs are you eligible for? Do you need to take advantage of any age-related catch-up rules?
Both 401(k)s, which are offered by employers, and IRAs, which are individual accounts, offer various tax advantages. Versions of each let you contribute either pre-tax or after-tax dollars, which then grow tax-deferred or tax-free (depending on the type).
Knowing the options you have, and identifying what works for you, is a valuable part of every retirement plan.
“National Save for Retirement Week is great to get investors thinking about the future,” Correnti said. “Ideally though, keeping your retirement in mind year-round will be more beneficial. Diligent planning during the entire year, not just one week, is necessary to realize all of your retirement goals.”
Next Step: Check out our retirement calculator to help you determine a retirement savings plan.
The content provided is for informational and/or educational purposes only. The information presented or discussed is not, and should not be considered, a recommendation or an offer of, or solicitation of an offer by, Scottrade or its affiliates to buy, sell or hold any security or other financial product, or an endorsement or affirmation of any specific investment strategy. You are fully responsible for your investment decisions. Your choice to engage in a particular investment or investment strategy should be based solely on your own research and evaluation of the risks involved, your financial circumstances, and your investment objectives. Scottrade, Inc. and its affiliates are not offering or providing, and will not offer or provide, any advice, opinion or recommendation of the suitability, value or profitability of any particular investment or investment strategy.
Scottrade does not provide tax advice and the information contained herein is not meant as a replacement for professional advice. Please consult your tax or legal advisor for questions concerning your personal tax or financial situation.
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