Retirement
02.05.2024 By Breanna Johnston, AFC® Candidate & Carolyn Pemberton

6 Simple Steps To Jumpstart Your Retirement Savings!

Retirement is one of those endeavors that fall into the “someday” category. When living your day-to-day life as a person in their 20s, 30s, and even your 40s and those everyday expenses pop up, it’s more difficult to save for something that is seemingly so far away.

Even with a goal that is far away, saving for retirement is on the minds of many workers. The 2023 Retirement Confidence Survey (RCS) from the Employee Benefit Research Institute (EBRI) finds just 64 percent of American workers feel confident in their ability to have enough money to live comfortably throughout their retirement, with only 18 percent feeling very confident. This figure compares to 73% in 2022.

The good news is that there are steps you can take to be financially confident about meeting your retirement saving goals no matter your situation. 

In today’s economy, we can’t overlook the fact that there are some people who are not making a fair living wage, making it difficult to save. But for those of us with the ability to save it’s important to understand that it’s never too late to start saving for retirement. Your future self will thank you!

So, what are the steps to take when you’re ready to jumpstart your retirement journey? Glad you asked! Here are our six steps below.

We’ve also created this great visual for you to follow: Download the 6 Steps to Jumpstart Your Retirement Journey PDF

6 steps to jumpstart your retirement journey

Download the 6 Steps to Jumpstart Your Retirement Journey PDF

1. Get in the “Retirement Ready” mindset.

The first step is getting in the right mindset, meaning-making your new savings goal a priority. We encourage you to “Start Small, Think Big” and take advantage of retirement solutions available to you like your employer's 401K or 403 B plan or IRA options you can open on your own. 

If you’re starting your retirement savings journey early, you have time on your side! However, if you’re closer to retirement age, you may want to save even more than suggested minimums in order to achieve your retirement goal. Explore catch-up contributions to your retirement savings as a way to jump-start your plan.

It is important to remember that saving even a small amount helps to build the habit. Starting with or increasing your retirement savings by one percent can provide the emotional boost needed to push ahead with the goal.  

2. Define what retirement will look like for you.

Your retirement years will be as individual as you are! Have you visualized how you’d like your retirement to look and feel? Think about where you want to settle down. Will you stay put and have sweet tea and lemonade on the front porch most days or do you intend to travel far and wide? Most importantly, how much “annual income” will you need to achieve this envisioned lifestyle? Asking yourself these questions will help determine a rough estimate of how much to start saving now. 

Someone who plans to travel and or have an active lifestyle when they retire may need to save more than someone who has a home that is paid off with no grand plans of world travel. 

You will also need to consider exactly when you want to retire. This will help determine how much you should be saving annually. In the modern age, people pre-retire, semi-retire or even never leave the workforce at all.

3. Calculate how much you’ll need to save.

Once you have an idea of what type of retirement you want to have, estimate the annual retirement income needed. You want to ensure you are saving for the future you want.

What each person needs will vary widely based on several factors, including your current age, the age at which you plan to retire, if your partner or spouse has an income, your spending habits, and different sources of retirement income. There are also circumstances beyond your control, like how long you can expect to live based on family history.

There are many retirement calculators available online that can help you estimate what you need to save before retiring. You may want to check with your financial institution or the company sponsoring your employer’s retirement savings plan to see if they offer such a calculator or financial planning services. Whatever option you use, be sure to include your projected Social Security benefit into the equation. The more accurate the information you include in your calculations the more accurate the estimate of what you need to save will be.

4. Take the America Saves Pledge.

Now that you have a better idea of what exactly you’re saving for and how much, it’s time to consider how you’ll achieve your dream retirement. The America Saves Pledge is a tool that helps you make a simple plan to meet your savings goal while offering you long-term accountability and support along the way. Take the America Saves Pledge and visit AmericaSaves.org for tips, resources, and support on your journey towards retirement. Remember: savers who make a plan are twice as likely to save successfully!

 

5. Do your homework.

Consider what type of accounts to deposit your retirement savings into. Your employer may offer a retirement plan such as a 401K, 403B, or SEP-IRA and match your contributions up to a predetermined percentage. Find out if your employer offers a match and when at all possible contribute at least enough to maximize that benefit.

Individual Retirement Arrangements (IRAs) are also an option, and you can open one anytime through financial institutions or financial services providers. There are several different IRAs including the most common: Roth and Traditional. Roth IRAs can be withdrawn at anytime without penalty and are tax-free. Traditional IRAs may be tax-deductible and your earnings grow tax-deferred until you start making withdrawals. You’ll need to determine which is best for you — or maybe a combination of both. The IRS has put together a great comparison tool to understand the differences between the two accounts and decide which may be better for you.

 

6. Prioritize making your contributions automatically.

Now that you can visualize the type of retirement you want, have determined approximately how much you’re saving for, and have a plan and support in place, the best thing you can do is to set up automatic payments to easily stay on track! Set up automatic payments and contributions either through your employer or from a financial institution.

The point of retirement savings is to keep it invested for the long term. This means avoiding dipping into your retirement fund for emergencies when at all feasible. This is where having an emergency savings fund that you are contributing to consistently can help preserve your retirement savings for their intended use.

Trying to understand if you are on track with your retirement savings can be tricky. May financial firms publish savings benchmarks that show the ideal levels of savings at different ages relative to your income. While this a quick way to gauge whether you’re on track, it’s not a replacement for a financial plan that accounts for your current situation, your values, and your goals.

Whatever path you choose to take toward retirement, the biggest step to take is being consistent. Retirement savings is a long-term commitment, but today’s work will pay off in the long run, literally. Take the America Saves Pledge and let us help you reach your goals, no matter what they are. Your future self will thank you!

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