5 Tips to Help You Start Saving for Retirement

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A retired couple cooks together

Planning for retirement can feel like an overwhelming task. It can require years of work, a basic understanding of finances and investing, and the discipline to see your plan through, sometimes decades into the future. But don’t worry — every good plan starts with simple steps. And your retirement plan is no different. If you’re ready to get moving on your retirement goals, check out these five simple tips to help you save for retirement.

1. Calculate How Much Money You Will Need

You might not know exactly how much money you’ll need in the future, but a great place to start is to understand how much money you’re spending right now. Write down all your current monthly and yearly expenses. Then, determine whether these costs will likely stay the same, go up, go down, or go away by the time you retire. While you’re at it, think about how you want to live and what you want to do when you retire. This can include trips you want to take, family you want to visit, a community or home you want to live in, and any other goals you have for your retirement. Then, add in the extra expenses to cover these goals. This exercise can give you a rough idea of how much money you’ll need on a monthly and yearly basis in retirement.

2. Calculate How Much Money You’ll Need to Save

Now that you have an idea of how much money you’ll need to retire, calculate how much money you should save to reach your goal. You can use an online retirement calculator to help you figure out how much you’ll need. Or, you can do the math yourself. Decide when you want to retire — whether that will be 10, 20, 30-plus years from now — and calculate how much money you’ll need to save every year until you retire to hit your goal. Again, these numbers are rough and will change, depending on your investments, your interest rates, any new goals you decide on later for retirement and other factors, but it can give you a good savings goal to get you started and on the right track.

3. Understand the Time Value of Money

Your money is worth more in the future than it’s worth today, as long as you invest it right. The longer you save (and the more you can keep contributing to your savings), the more your money will compound and the faster it will grow. Your money’s earned interest gets reinvested and earns even more interest (hence the name compounding), which helps your savings grow over time. In other words, it makes all the sense in the world to make your money work for you now, so you don’t have to work so hard in retirement.

4. Explore Savings Options

If you work for an employer that’s willing to match your retirement contributions (sometimes call 401(k) contributions), you should try to contribute as much as you can every month to take full advantage of the free retirement money. If not, you can always look into other retirement account options, including Individual Retirement Arrangements (IRAs), Roth IRAs, and more. Traditional IRAs allow you to save for retirement without having to pay taxes until you make withdrawals in retirement. Roth IRA contributions are not tax deductible, but you won’t have to pay taxes on withdrawals after you reach a certain age. Both options can help you save money and earn interest, which gets added to your savings. 

A retired couple cooks together

5. Weigh Investment Risk

When you contribute to a retirement account, your money gets invested in either stocks, bonds, mutual funds, or other investments. These investment types range from potentially risky (with a potentially high reward) to relatively safe (with a relatively expected reward). Most experts advise taking on more risk when you’re younger and reducing your investment risk the closer you get to retirement. Each investment carries its own individual risk, but in general, stocks are riskier (but have a potentially high reward), while bonds and mutual funds are generally considered safer investments, with expected returns.


Your retirement plan might just be the biggest plan you ever make. But as long as you start simply — learn the basics and start investing your money as early as possible—you can reach your retirement goals one simple step at a time.