Seven Ways to Save for Retirement

It can be hard to imagine growing old—or older than we are right now. But, like your parents and grandparents before you, you will likely retire one day. Even if you love working, you just may want the option to do other things and the means to afford those activities.

The best gift you can give your older future self is to regularly set aside some savings for your later years. Your interests may change over the next few decades. You may trade snowboarding for skiing or the other way around. You might go from bird watching to watching major league sports. Who knows? The point is to have the freedom and the funds to spend your time doing what you love—and not be dependent on your children or the government for your basic needs.

Here are a few tips to start helping out your older self, even if you can’t quite picture yourself at retirement age:

1. Start saving for retirement early.

If you regularly set aside even a small amount in your twenties, compounding interest can help your savings grow over time. Along the way, you’ll gain tax advantages and should benefit from the time value of money--the concept that a dollar invested today will be worth more in the future due to its earning potential. 

2. Use your company’s 401(k) plan to save for retirement.

Try to contribute enough to take full advantage of all available employer matching funds.

3. Roll your 401(k) plan over if you leave your job.

Choose an Individual Retirement Account (IRA) or open a 401(k) plan if it’s available through your new employer. Withdrawing the funds, rather than rolling them over, can result in substantial financial penalties.

4. Set up an Individual Retirement Account (IRA).

If your company doesn’t offer a 401(k) plan, you can easily set up an IRA through your bank. You don’t even need a broker. Don’t worry that you’re not an investment expert.

5. Make regular automated payments to your IRA, if you go that route.

This easy approach frees you from having to remember to pay yourself and ensures your contributions aren’t competing with something more appealing in the short term—like a new surfboard, bike or shoes.

6. Consider opening a Roth Retirement Account.

Look into a Roth IRA or a Roth 401(k), if your employer offers it. To learn how a Roth account can complement a traditional IRA or 401(k), check out our blog on seven things to know about Roth accounts.

7. Pad your retirement with a Health Savings Account (HSA).

If you have a high-deductible health insurance plan, you contribute funds into a health savings account and can use them to pay for qualifying medical expenses. Contributions, earnings and withdrawals from the account are tax-free, and after age 65 you can use any remaining savings for nonmedical expenses without penalty.