The retirement savings stats are pretty scary: Fewer than half of Americans have even calculated what they might need to retire.
Of the folks in workplace 401k plans (or similar), less than a third participate, according to the U.S. Department of Labor.
Meanwhile, the average American spends 20 years in retirement. Savings is the key to enjoying those years, since employment after a certain point becomes less available and failing health can make work impossible.
So, you’re turning some age with a zero attached and you’re thinking, “Yes, I need to get serious about my retirement savings.” How does one even start?
Here’s your retirement savings kick-start guide, step by step.
1. Save, even if it’s a little bit at first
There is a huge difference between saving a small fixed amount and saving on a whim. Retirement savings you set aside only when you have a windfall is subject to being raided for short-term needs.
It’s important to have a rainy day fund, a cushion in your savings account to avoid living check-to-check. But real retirement savings is money you lock away every paycheck, every month, without fail and without spending it down to cover a credit card bill. Get serious about this.
2. Let the government and your employer help
The best way to get serious is to make the money evaporate from your check before you even get it. Talk to your human resources office about joining the company 401k plan. You’ll find that doing so gets you a tax break on your income and, often, a company match that vests pretty quickly — within a few years or even immediately.
Most importantly, out of sight is out of mind. Your retirement savings can grow painlessly if you save it programmatically through your employer.
3. Make a serious plan
A really big goal is great. But you have to make it real and specific. “I want to travel the world” is meaningless and won’t happen. “I want to spend two weeks in Spain by the end of this year” is very specific and might actually occur.
Likewise, spell out your retirement plan — in writing is best — in concrete terms. “I will move to Oregon and buy an apartment near the water, bike for exercise and take continuing education classes” is a great plan. “I can afford it using my estimated Social Security, my 401k balance and by working part-time as a consultant” is even better.
Can you get from here to there? Absolutely. Once you have a growing balance in your retirement savings plan it will soon be time to invest.