According to Investopedia, only 54.4% of “American families had retirement accounts in 2022.” That’s nearly half of the population struggling who likely don’t have the means to even think about retirement right now. And with the price of almost everything going sky-high in the past few years, it’s no wonder that saving for your future is harder than ever.
One thing you’ve probably heard over the years is that the earlier the better when it comes to responsible retirement savings, but oftentimes that just doesn’t work. Between buying a home (if you can even afford one), all of the kids' necessities, and helping our parents with health care costs, a lot of people have put retirement savings on the back burner in the hopes that easier financial times may be down the road.
With that said, there may be some families and individuals out there who are in a fairly decent place who may be starting to think about saving for their retirement but don’t really know where to start. To those just getting started, it can seem like a massive undertaking but you can start to make some positive strides when you sit down and make plans that make sense to your lifestyle and means.
So, let’s break everything related to retirement saving down and get into our easy guide to getting started on saving for your future.
Whether you’re a single parent or doing life with a partner, try to set a reasonable retirement savings goal that feels doable.
Between everything from paying your rent, health insurance, vehicle expenses, and groceries, the list is just never-ending when it comes to what you need to spend your paychecks on every single month. If you find yourself pausing to think about what your future is going to look like once you hit retirement age, there is something fairly straightforward to start with.
According to Forbes Advisor, it makes sense to think about all of the financial “variables” that are going to come up time and time again such as family vacations and medical expenses because first and foremost, you need money for the present. But when it comes to beginning this whole process, it makes sense to simply try and come up with a reasonable retirement fund goal that makes sense to your lifestyle.
The online publication notes that most individuals at 25 years old try to save at least 15% of their income every year if they hope to retire in their early 60s. If you’re willing to work until 65 or 70 years old and you’re starting to save for retirement in your 30s, that’s fine, too. Once you come to a percentage that you’re comfortable with, you’ll start to see the bigger picture of what you want your end goal to really look like.
Look for tax-free retirement savings at every opportunity.
Even if you’re not financially savvy, certain types of retirement savings accounts are going to help you accumulate more in the long run because you’re not going to have to pay huge amounts of income tax on them every year.
For instance, RBC notes that for Canadian citizens, a Registered Retirement Savings Plan, or an RRSP, works well for working individuals because “your contributions can be deducted from your total income in the year you make the contribution,” which reduces the amount of income tax you’ll need to pay.
If you’re in the United States, Investopedia suggests an IRA account which is a “special individual retirement account” where taxes are paid when they go into the account, but once you get to retirement age and are looking to make withdrawals, they are all tax-free.
Whether you’ve been there for years or just started with a new company, always inquire about employee retirement plans and employer matching.
Even if you’ve been at your current employer for years and you think you know all about any retirement savings perks, it’s always worth it to check in with human resources or the pension plan manager to make sure you are fully taking advantage of everything available to you.
Manulife Bank suggests checking in to see if any employer-matching contributions, like a 401(k) account, can be arranged because that’s a whole other kind of retirement savings fund that will be available to you when you finish working.
The financial institution notes that even if you find it harder to save if you’re in your early 30s with family life taking a priority, this account will be there for you when you hit 60 and retirement is imminent, which is always a nice feeling.
Pay attention to the times in your life when you’re bringing in more money and stash away those extra funds for retirement.
We all know how much fun it can be to immediately book a vacation or finally purchase a new living room set when you’ve had a good month at work with tons of overtime and that paycheck is looking large. If a leisurely retirement is a real goal for you, it makes sense to save those big or little chunks of extra money in your retirement account to help it properly accumulate.
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Merilledge.com explains that you can even be extra thoughtful and adjust your retirement contributions when good things happen in your life, such as a raise at work or when a lucrative side hustle takes off that can help build up that retirement account even more. It may be tempting to put that money toward something fun — and you should feel free to treat yourself from time to time — but, you will likely be happier in the end if you’re continually building toward that larger financial goal for later in life.
If you get lost, speak to a financial planner about your retirement goals as they can help steer you in the right direction.
For those who feel completely lost when even thinking about saving for retirement, there are all sorts of experts you can speak to who can help break things down for you on a basic level that’s both easy for you to understand and will ultimately help you start to save.
Pension Solutions Canada notes that there are specialized financial planners available for hire, but it’s a good idea to check out their credentials and look for someone who’s certified or chartered as then you can be assured that they’re a professional who’s properly trained. Don’t be afraid to reach out to a friend who might know someone good or even interview a few different people to ensure you’ve found the right person who can help you meet your retirement goals.
