All of the best investment strategies in the world depend on one thing, saving. Prioritizing and setting aside money for retirement is the first step toward meeting your financial goals in retirement.

So why don’t more people do it? Two reasons. They don’t think they will ever retire, and they don’t think they can afford it. We have news for you. You probably will, and you probably can. Here are some tips for making it so.

Make saving automatic

It is recommended you save 15% to 20% of your income for retirement. That probably sounds daunting, but it is achievable. Consider raising your contributions by 1% per year.

One way to make this easier is to commit to saving before you ever see the money hit your account, this gives you an important psychological advantage. Tools such as automatic deposit into a savings account can lessen the temptation to splurge.

It is also a useful budgeting tool. If you consider a portion of your income to be “locked”, then you can make key decisions about home mortgages, car purchases and vacations.

Take advantage of employer contributions

You’ve heard us say it before. You will hear us say it again. It will be true every time. If your employer offers an employee match for your 401k or 403b, take advantage of it.

Avoid the temptation to procrastinate and put it off. Generally speaking, you can make these changes any time of year; you don’t have to wait for open enrollment. If you are not enrolled in your company’s plan, or are unsure of how to adjust your contribution, reach out to your human resources team.

Start thinking about taxes now

Especially if you are a young worker, you may be heavily invested in tax-deferred accounts. This can be a real problem when required minimum distributions (RMDs) hit and you are stuck with a high tax bill.

This might sound like a good problem to have. If you are paying a lot in taxes, that means you have plenty of money squirreled away, right? We’ll tell you this. Never once has a client came to us in retirement and said taxes are not a big deal. Keep in mind, this is the money you will have to live on some day.

If you think adding an extra 1% of your income to savings is daunting, try paying an extra 5%, 10% or 15% in taxes! You want to make sure your retirement savings are diversified, not only by asset class and company risk, but by tax liability.

Engage a seasoned advisor

In addition to providing personalized advice, your advisor can also be the kick in the pants you need to start getting serious about your retirement. You’d be surprised how much more diligent people get about their saving when they have to look at the person who knows everything about their finances straight in the eye.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.


This article was originally published in the Pioneer Press. You may view the article here.