Life Events

Retirement saving rewards consistency more than cleverness. These ten habits help most people end up with more.

1. Start as early as you can

Time does much of the work. Money invested early has more years to compound, so even modest contributions in your twenties and thirties can outgrow larger ones started later.

2. Capture the employer match

If your employer matches contributions, contribute at least enough to receive all of it. Passing it up is like declining part of your pay.

3. Save a set percentage and raise it

Decide on a percentage of income, automate it, and increase it every year or whenever you get a raise. You will adjust to the smaller paycheck more easily than you expect.

4. Use tax-advantaged accounts

401(k)s, IRAs and similar accounts offer either an upfront deduction or tax-free growth. Consider a mix of pre-tax and Roth money to give yourself flexibility in retirement. The IRS publishes the current annual limits at irs.gov.

5. Diversify

Spread your money across different types of investments instead of concentrating in one stock, such as your employer's. Diversification does not prevent losses, but it reduces the damage from any single failure.

6. Keep costs low

Fees reduce your returns every year. Compare expense ratios and advisory fees, and understand what you are paying for.

7. Do not panic during downturns

Markets fall from time to time. Selling after a decline locks in losses and risks missing the recovery. Match your investment mix to your time horizon and your ability to tolerate swings, then stick with the plan.

8. Keep an emergency fund

Having cash on hand for surprises keeps you from tapping retirement accounts early, which can mean taxes and penalties as well as lost growth.

9. Keep your savings when you change jobs

When you leave an employer, roll the balance to an IRA or your new plan rather than cashing out. Cashing out can trigger taxes, an early withdrawal penalty and the loss of years of growth.

10. Catch up as you near retirement

The tax law allows extra contributions for people over a certain age. If you are behind, these catch-up contributions and delaying retirement or Social Security can help close the gap. Also review your plan and your beneficiaries regularly.

We would be happy to help you build a plan around these habits. Get in touch with our firm to review your retirement savings.