1. Money
You can opt-out at any time. Please refer to our privacy policy for contact information.

Top 5 Ways to Get Started With a Retirement Plan

These are the first steps to start building your retirement plan.

By

Are you like countless others, wondering where to start retirement planning? No need to worry or procrastinate any longer. The most important thing is to do is to simply begin. Here are five top ways to help you get started.

Retirement Plan Step #1 - Start Saving

The only way to create wealth is to save. Only by saving will you have money in the bank or otherwise invested. By the time retirement rolls around, the dollars you save today may have grown many times over. The key is to begin and to begin soon. Thanks to the miracle of compounding interest, it is the money you save today that has the opportunity to grow by the most. Each year you wait can be costly, so make sure to save enough.

How Much Should You Save for Retirement?
The Saver's Credit - How the Government Might Help You Save for Retirement

Retirement Plan Step #2 - Use Your 401(k) Plan

Although not every employee will have a 401(k) plan available to them at work, those who do will be hard-pressed to find another retirement planning opportunity as lucrative as that one. Thanks to the benefits of tax-deferral and automatic savings, you’re likely to find your account balance growing faster than you previously thought possible. Plus, due to the penalty for early withdrawals, you’re unlikely to take your money spontaneously (That’s a good thing because you want it to be there for your retirement).

A 403(b) or a 457 plan may be available to some employees instead of a 401(k) plan and, if so, typically work very similarly. Other employees won’t have access to any of these plans. That’s why there are IRAs.

What is a 401(k) Plan?
Are You Eligible to Contribute to a 401(k) Plan?

Retirement Plan Step #3 - An Employer Matching Program Means Free Money!

If your employer offers a matching program as part of your 401(k) plan, you’ll have the opportunity to receive additional funding for your retirement at no cost to you. But to receive the funding, you need to participate to a certain level in your 401(k) plan. However, this is a no-brainer! After all, you’d never knowingly say “No” to free money, right?

Make the Most of Your 401(k) Match
What are 401(k) Vesting Schedules?

Retirement Plan Step #4 - Don’t Forget The IRA’s

A traditional IRA contribution allows your money to grow tax-deferred. Depending on your income, tax filing status, and ability for you (and/or your spouse) to contribute to a workplace retirement account, your IRA contribution may even be tax deductible, further saving you money on this year’s taxes.

What are Individual Retirement Accounts (IRAs)?
How to Open an IRA

Retirement Plan Step #5 - A Roth IRA Could Be Even Better

Imagine access to a retirement fund without having to pay income taxes. It could happen – through the Roth IRA. Although you won’t receive a tax deduction for any contributions you make, your money grows tax-free, making it a truly fantastic place to begin saving for retirement.

What are Roth IRAs?
Who Can Contribute to a Roth IRA?
  1. About.com
  2. Money
  3. Retirement Planning
  4. How to Begin
  5. How to Start Planning for Retirement

©2014 About.com. All rights reserved.