by Laura D. Adams

5 Ways to Successfully Save for Retirement

Planning for retirement can be confusing and a little scary. To do it right, it seems like we’re supposed to be clairvoyant and know exactly how long we’ll live and what our expenses will be after we stop working. We also have to make key assumptions about what the inflation rate will be decades from now, how long we’ll be healthy enough to work, and if our ailing Social Security system will still have a heartbeat. As much as the details of retirement planning can bog you down, I’m going to give you five tips to make sure you’re successful.

But, first I want to share a great pointer that I learned when I was taking golf lessons from a pro. He told me to think about the hole like the bull’s-eye on a target when I’m putting. He encouraged me not to focus too intently on the hole, but to visualize a two or three foot wide circle around the hole as a broader target. It’s amazing how that one tip takes the pressure off and transforms the way I putt. Even though I haven’t played golf in a while (and I’m really bad), that tip still helps me when I do play.

Investing for retirement is very similar. Yes, there’s a retirement savings “number” that each of us should figure out and shoot for as a bull’s-eye goal—whether it’s $500,000 or $5 million (I’ll tell you how to come up with that number in a moment). But in the decades that precede retirement, your job isn’t to obsess about the “number” as much as it is to keep the general target of financial security top of mind and to keep a positive attitude about accomplishing that goal.

Here are five tips to make sure that you retire rich and on time:

1. Create an investing routine as early as possible. It might surprise you to know that the most important factor for investing success isn’t the specific investments you choose—it’s time. The more time you have to make routine contributions, even if it’s just $50 a month, the faster your retirement account will snowball. Compounding interest is a powerful force that can make even the most inexperienced investor rich. So if you’re not in the retirement investing game yet, you’re burning valuable time! Get the information you need to start participating in a workplace retirement plan, to open up an IRA, or to do both, right now .
2. Start buying a secure future. When you make a conscious decision to cut back on unnecessary spending and to put money in a retirement account, you’re buying one of the greatest gifts of all—a secure and happy financial future. You might be able to retire early or to start a second career with your financial freedom.  
3. Knock out your expensive debts. Paying high interest for credit card balances or car loans is like running the heat during the winter with all your doors and windows wide open. It’s inefficient and you’ll waste a lot of money on big utility bills. Make a plan to get rid of your expensive debts and to put your money to work for you by contributing it to a retirement fund, instead of wasting it on interest.
4. Never take money out of a retirement account. Your investments can’t work for you if they’re not invested, and that’ll only delay your retirement. If you left a $20,000 balance alone to grow at an average of 7% for 30 years, you’d have over $150,000—even if you didn’t put in another dime. But if you were to contribute $200 a month over those three decades, you’d have almost $400,000 for a secure future! Be sure to read more about the taxes and penalties you face for taking a withdrawal or a loan from a retirement account on the Money Girl blog .
5. Use a retirement planning calculator. Visit AARP.org or choosetosave.org and enter your information in a retirement calculator to get an idea about how much you should accumulate for your dream retirement.

Laura Adams is the author of a new book, Money Girl’s Smart Moves to Grow Rich. Pre-order it now at MoneyGirlBook.com or from your favorite book seller. She blogs and hosts the Money Girl weekly podcast on Quick and Dirty Tips. The views and opinions expressed are strictly those of Laura Adams and MoneyGirl and not of CreditReport.com. CreditReport.com assumes no responsibility for the accuracy of this information.  

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