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Save now, celebrate later

By Jennie L. Phipps ·
Tuesday, October 20, 2015
Posted: 12 pm ET
It may seem tough to maximize your savings now, but one day you'll be glad you did.

It may seem tough to maximize your retirement savings now, but one day you'll be glad you did.

In honor of National Save for Retirement Week, I offer some suggesstions for saving more and smarter via Joe DeSilva, senior vice president and general manager at ADP Retirement Services.

ADP manages things like payroll for more than 610,000 companies. That gives them the inside track on who saves and who doesn't. A study by the ADP Research Institute used anonymous 2014 payroll data from about 10 million employees between the ages of 20 and 69 with total annual compensation of at least $20,000. The study showed that the older workers grow, the more likely it is that they will save in their employer-sponsored retirement plans. For example, 41.1% of workers between the ages of 20 to 24 contributed, but 65.6% of workers age 55 and older contributed. Obviously, the older you get, the smarter you get. Or the closer you get to retirement age, the greater the sense of urgency.

Whatever a worker's age, DeSilva has some good advice.

Millennials (born between 1981 and 1997)

  • Start saving as early as you can to take advantage of the power of compound interest.
  • Think about what you'd like to do in retirement. Actively planning can give you the incentive to save.
  • Put your savings on autopilot by allowing your employer to automatically increase your contribution level annually.
  • Don't wait to save until all your college loans are paid off. Get in the habit of simultaneously saving and paying off debt.
  • Consider contributing to a Roth 401(k). Once you retire and start withdrawing your money, you won't have to worry about paying taxes on your savings.

Gen X (born between 1965 and 1980)

  • Save for retirement first. "You can borrow for your child's college education, and you can purchase long-term care insurance for elderly parents, but you cannot borrow for your retirement," DeSilva says.
  • Understand that these are your prime earning -- and saving -- years. There will never be a better time to aggressively save.
  • Recognize that it's never too late to start saving. Don't feel that you are so far behind that you'll never catch up. That's only true if you don't get started.
  • Consider going to a fee-only financial planner for a fiscal checkup. Ask the adviser to evaluate your savings (both retirement and personal), investments, debt (both credit card and mortgage) and life insurance.

 Baby boomers (born between 1946 and 1964)

  • Evaluate your situation, taking into account Social Security, old-fashioned defined benefit pensions, the amount you have put aside in your retirement savings accounts as well as other assets. Then make a plan.
  • Save aggressively. Now's the time to put aside as much as you can, including taking advantage of catch-up contributions.
  • Invest smartly. This is probably not the right time to have most of your money at risk.
  • Try living on your retirement income now. Save the money you're not spending.

No matter what your age, don't make the mistake of borrowing from your retirement nest egg. Aging is a sure bet, but you can't count on being able to pay back the money you borrowed.

Here are 7 more can't-miss tips for anyone saving for retirement.

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