What we'll cover
How to save for retirement
Tips to automate your savings
Using a robo portfolio for retirement savings
If you aren't exactly sure how to begin, try one of these 10 ways to jumpstart your retirement planning for the future you want.
Think of saving for retirement as learning a new skill, like an instrument. It's about being consistent and diligent with small, regular efforts over an extended period.
1. Start saving today
Learn more about how to start saving money and read on to learn how to start a retirement fund.
2. Contribute to your 401(k)
How does it work, exactly? You sign up for automatic deductions from your paycheck through your workplace plan. You can get a tax break when you contribute money or withdraw after you retire.
Traditional 401(k): 401(k) contributions to a traditional 401(k) plan are taken out of your paycheck before taxes, so your money grows tax-free. They also lower your taxable income for the year. However, you must pay taxes on that money when you retire — you can't get away with paying zero taxes on that income forever.
Roth 401(k): A Roth 401(k) allows you to contribute after-tax income to an account. You can take the money out tax-free in retirement.
Contact the human resources office at your company to learn more about setting up a workplace plan.
3. Check for employer match
As noted earlier, an excellent way to build retirement savings is with an employee-sponsored retirement account, like a 401(k) — especially if your employer offers a match. The match gives you extra funds that go into your retirement fund. If your employer provides this benefit, begin by contributing at least enough to take advantage of the entire match, so you don’t leave any money on the table.
4. Open an IRA
If your work doesn’t offer a match or retirement plan, you might want to open a tax-advantaged retirement account, such as an Individual Retirement Account (IRA). With a traditional IRA, your money grows tax-deferred, meaning you pay taxes when you withdraw during retirement. With a Roth IRA, you contribute after-tax dollars, and it grows tax-free. Whichever IRA account you choose, opening a tax-advantaged retirement account is a smart first step to getting serious about saving for those golden years.
5. Plan your asset allocation
You might consider the Rule of 110. With this method, all you do is subtract your age from 110. The resulting number can help give you an idea of what percentage of your portfolio to direct toward securities like stocks with the remaining percentage going toward more conservative investments, such as bonds. Adding in exchange-traded funds (ETFs) can help you further diversify your asset allocation. Keep in mind the rule of 110 is just a starting point — always adjust for your own unique situation.
6. Automate your savings
Ally Bank makes saving easier with smart saving tools in our Savings Account. These features help you organize, optimize and analyze your money to push your savings further.
7. Set a goal
Consider using a retirement savings calculator to help you outline your goals. A retirement savings calculator can help you calculate precisely how much you'll have in savings when you reach your target retirement age and whether your current savings rate will support your standard of living in retirement.
8. Stash extra cash
Directing any new income toward your retirement fund (whether an IRA or other savings method) is an effective way to ensure your contributions continue to grow without impacting your lifestyle. And, like windfall money, you won't even notice it's not in your bank account.
9. Reevaluate your spending
Use budget templates to keep your finances on track.
10. Use a robo advisor
Saving for retirement isn't an insurmountable mountain. It's not a long, winding race you need to battle. It's an ongoing process that takes persistence and small, steady contributions — week by week or month by month. If you have the resolve to get started and learn as much as you can about how to start saving for retirement, you're on the right track to mastering retirement savings.
