Save for Retirement in 6 Steps

Planning for retirement can be daunting. If you’re afraid your savings will fall short of offering you a comfortable life after you leave work, try these ways to save for retirement so you can enjoy your golden years the way you should.

 save for retirement

1. Max out your 401k

If your money is not in your paycheck, you won’t spend it. So ask your employer to step up contributions to your 401(k) or other workplace retirement account. At the very least, contribute enough to capture any employer match. If you don’t, you’re leaving money on the table.

To avoid taking a big hit immediately, boost contributions by one percentage point a year until 15% of your salary is being deducted. Remember, you get a tax break for every dollar you put into your account.

2. Count your pennies

That old adage—a penny saved is a penny earned—is actually wrong. A penny saved can compound into dollars over the long run. That means you need to get a grip on your spending.

Take a close look at six months’ worth of credit card bills. Save receipts. Carry around a small notebook for several months and jot down each purchase. You may be shocked by what you find.

3. Change spending habits

Once you assess your cash outflow, scour your spending for likely cutbacks. Of course, you deserve a treat, but can’t you brown bag a lunch at least twice a week? Some ideas to save without pain:

  • By raising your car insurance deductible to $500, from $250, you can cut premiums by up to 30%.
  • Find a bundled package for your phone, TV and computer—or drop your landline altogether (or drop premium channels that you rarely watch).
  • If you’re paying more than 5% on your mortgage, it’s probably worth refinancing.
  • Try your hand at negotiating, on everything from appliances to furniture.
  • Drop the gym membership that you never use—buying free weights is cheaper (but only if you’re going to use them) 
4. Keep investing simple

With cash and money-market funds showing negative returns after inflation, you should dip your toe in the stock and bonds markets. The easiest investment is an all-in-one “target date” retirement fund, which sets asset allocation by age and switches to more conservative allocations as you get older.

You can find target-date funds at Vanguard, T. Rowe Price, Fidelity and many other fund Web sites. Or invest in low-fee “index” mutual funds, which track

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