If you are in your 30’s and 40’s you are busy; you have homes to buy, children to raise and careers to build.  While you are doing all of that, if you had better be careful, you could be destroying your retirement.

If you do not take the necessary precautions during your working years, you may be forced to extend your working years and that means you may have to work for a very, very, very long time.  Is that what you want?

The 5 Ways To Save Your Retirement

1) Avoid Debt During Working Years.

  • Debt is a waste of money

If you over extend your credit, spend more than you earn and end up with too much debt, you are going financially backwards vs forwards.

You only have so many working years to pay off the debt you have accumulated.  One of the worst financial positions you could put yourself into is to enter retirement in debt.  When you retire, your income stops so where will you get the money to pay off your debt?

Another disadvantage of debt is that while you are in debt you are wasting large amounts of money on fees and interest charges; money that you could be investing into your retirement plans.

2) Avoid Winging It

  • There is no do-over

Don't destroy your retirement

Image by steve loya via Flickr

If you are making up your retirement investing as you go along you will be in for a huge surprise at retirement.  It is a bad financial move to guess at how much retirement income you will need.

There is no do-over, once you reach your retirement years your working years are pretty much over.

Your working years (20’s through 60’s) are for the purpose of saving for your retirement years (60’s through 90’s).   Once you hit your retirement years your stream of income usually stops completely; all you have to rely upon for retirement income  is your retirement investments.

Once your paychecks stop, you can only hope you invested enough into your retirement plans.   Use a retirement calculator to determine how much money you will need to live on during the second half of your life (your 60’s through your 90’s).

3) Over Fund Your Retirement Plans

  • Having too much retirement money is not a bad thing.

Retirement planning: Over Fund Retirement PlansIf you are living from pay check to pay check, the usual outcome is to have zero money leftover to invest.   That is the exact opposite of what a financial planner would advise you to do.

Financial planners would suggest that you follow the practice of saving first and then adjust your spending according to the money that is leftover.

Don’t wimp out and not invest at all because you think that only large amounts of contributions to your retirement plan will make an impact.  The amount of money that you invest does not have to be large amounts of money; it all adds up, a little at a time over the long run works great.

4) A Retirement Calculator Works Wonders

  • Target Retirement Age, Retirement Income, Time Horizon

To determine how much you should be saving, find a retirement calculator that works for you.

Retirement calculators are designed to give you an estimate based on your target retirement age, amount of retirement income you want at retirement and your time horizon.    You can input different information to get different results.  Play with it, change the ages or time horizon to find out the different options you have.

5) Take Full Advantage

  • Free money, free money, free money

Do not miss the opportunity to take full advantage of work place retirement plans.    These plans were designed with you in mind; to help you invest for your own retirement, get free money and get tax advantages.

The tax advantage is that you get to defer paying taxes on your retirement contribution money until you retire…20 or 30 years from now.

You can get free money if your employer offers a matching contribution.   If you max out your retirement plan contribution, and your employer matches, you get more free money.   If you still have enough money to invest after maxing out your 401k retirement plan at work, then open a Roth IRA which also has tax advantages.

You Decide|No Pressure

Your money, your retirement, your future.   It seems like it’s all up to you…it is.   You get to decide what kind of financial future you want to have.   The financial decisions you make today about credit, debt, spending and saving will impact your financial future….make good decisions.