How to Save for Retirement - dummies

By Consumer Dummies

Part of Managing Your Money All-In-One For Dummies Cheat Sheet

Once the shock has worn off from realizing how much you need to save for retirement, the question is “How on earth am I going to save enough money by the time I retire?” The key is to start putting money away as soon as possible even if it’s only small amounts. Here are some tips for managing and saving your money:

  • Pay off your credit cards as much as possible. You’re paying them way more than your investments will pay you.

  • Save in a tax-deferred retirement account as soon as you can, to get more bang for your investment buck.

  • Start by saving just 1 percent of your pay if that’s all you can afford.

  • Save for retirement even if you think it’s too late. It’s never too late.

  • Save at least the amount your employer matches, otherwise you’re throwing money away.

  • Aim to put away 10 percent of your income for retirement each year; increase your savings rate each time you get a raise.

  • Aim to build a nest egg that’s at least 10 times your annual pay when you retire.

  • Take any company stock your employer gives you, but don’t invest your own money in it. Remember Enron.

  • Roll your retirement money directly into a new tax-deferred account when you change jobs. Don’t cash it out.

  • Don’t take a hardship withdrawal or loan unless absolutely necessary.