• Mortgages
    Get the Best Rates
    • Mortgage rates
    • Refinance rates
    • 30-year mortgage rates
    • 15-year mortgage rates
    • 20-year mortgage rates
    • 10-year mortgage rates
    • Mortgage lender reviews
    Use Calculators
    • Mortgage calculator
    • How much house can you afford?
    • Mortgage refinance calculator
    • Mortgage payment calculator
    • Amortization calculator
    • All mortgage calculators
    Get Advice
    • What to know about reverse mortgages
    • Home buying guide
    • Refinance your mortgage
    • First-time homebuyer loans and programs
    • Prepaying your mortgage
    • Your guide to FHA loans
    • Everything to know about VA loans
  • Homes
    Home Buying
    • Determine your budget
    • Find your home
    • Get prequalified
    Get Advice
    • Step-By-Step Homebuying Guide
    • First-Time Homebuyer's Guide
    • How Does Rent-To-Own Work?
    • What To Look For When Buying A Home
    • Homebuyer Mistakes To Avoid
    Learn How To
    • Make An Offer On A House
    • Decide Between Renting vs. Buying
    • Ace the Final Walk-Through
    • Find The Best Real Estate Agent
    • Buying A Second Home
    Use Calculators
    • How Much House Can I Afford?
    • Rent Vs. Buy Calculator
    • Cost of Living Calculator
    • How Much Should I Put Down?
  • Banking
    Compare Accounts
    • CD rates
    • Savings accounts
    • Money market accounts
    • 1-Year CD rates
    • 3-Year CD rates
    • 5-Year CD rates
    • Checking accounts
    • Bank ratings
    Use Calculators
    • Savings calculator
    • CD calculator
    • Compound savings calculator
    • All banking calculators
    Get Advice
    • How to save money
    • Federal Reserve news
    • What is a money market account?
    • Which certificate of deposit account is best?
    • How to open a savings account
    Bank Reviews
    • Capital One Bank
    • Marcus by Goldman Sachs
    • American Express National Bank
    • CIT Bank
    • Synchrony Bank
    • Barclays Bank
    • All Bank Reviews
  • Credit Cards
    Compare by Category
    • Best Credit Cards of 2019
    • Rewards
    • Travel
    • Airline
    • Cash Back
    • No Annual Fee
    • Balance Transfer
    • 0% APR
    • Business
    • Student
    Compare by Credit Needed
    • Excellent Credit
    • Good Credit
    • Fair Credit
    • Bad Credit
    • No Credit History
    • Secured Credit Cards
    Compare by Issuer
    • American Express
    • Bank of America
    • Capital One
    • Chase
    • Citi
    • Discover
    • Wells Fargo
    Get Advice
    • Credit Card Reviews
    • Credit Card Payoff Calculator
    • Balance Transfer Calculator
    • All Credit Card Calculators
  • Loans
    Compare Lenders
    • Personal loan rates
    • Personal loan reviews
    • Auto loan rates
    • Student loan rates
    • Student loan reviews
    Loan Types
    • Personal loans
    • Auto loans
    • Debt consolidation loans
    • Home improvement loans
    • Student loans
    • Medical loans
    • Bad credit loans
    Use Calculators
    • Loan calculator
    • Auto loan calculator
    • Personal loan calculator
    • Auto refinance calculator
    • Loan payment calculator
    • Student loan calculator
    • All calculators
    Get Advice
    • Student loans guide
    • Refinancing student loans
    • Refinancing personal loans
    • Refinancing auto loans
    • How to get a personal loan
    • Personal loan origination fees
  • Investing
    Best of
    • Best Investments
    • Best online brokers for stocks
    • Best online brokers for beginners
    • Best online brokers for mutual funds
    Brokerage Reviews
    • TD Ameritrade Review
    • Merrill Edge Review
    • Ally Invest Review
    • Fidelity Review
    • Charles Schwab Review
    • Vanguard Review
    • Interactive Brokers Review
    • Robinhood Review
    • Tradestation Review
    • E*Trade Review
    • WellsTrade Review
    • All Brokerage Reviews
    Use Calculators
    • Investment Earnings Calculator
    • Annuity Calculator
    • All Investing & CD Calculators
    Get Advice
    • Compare Online Brokerages
    • What is the long-term capital gains tax?
    • Passive income: What it is and 5 ideas for 2019
    • How to buy stocks
  • Home Equity
    Compare Lenders
    • Home equity loan rates
    • Home equity line of credit rates
    • Home equity lender reviews
    Use Calculators
    • Home Equity Calculator
    • Loan vs. Line Of Credit Calculator
    • Debt consolidation calculator
    • HELOC payoff calculator
    • All home equity calculators
    Get Advice
    • What is a home equity loan?
    • HELOC vs. Home equity loan
    • Consolidate your debt using home equity
    • Home equity loans with bad credit
  • Insurance
    Insurance Types
    • Car insurance
    • Homeowner's insurance
    • Health insurance
    • Life insurance
    Best of
    • Best Car Insurance Companies
    • Best Home Insurance Companies
    • Best Cheap Car Insurance
    • Top Car Insurance Comparison
    Company Reviews
    • Geico Insurance
    • State Farm Insurance
    • Progressive Insurance
    • Allstate Insurance
    • Liberty Mutual Insurance
    • Nationwide Insurance
    • The General Insurance
    • Farmers Insurance
    • American Family Insurance
    • Erie Insurance
    • Amica Insurance
    • Travelers Insurance
    Insurance by State
    • Car Insurance California
    • Car Insurance Florida
    • Car Insurance Georgia
    • Car Insurance Michigan
    • Car Insurance New Jersey
    • Car Insurance New York
    • Car Insurance North Carolina
    • Car Insurance Pennsylvania
    • Car Insurance Texas
    • Home Insurance Florida
    • Home Insurance Texas
  • Personal Finance
    Compare
    • Current interest rates
    • Compare rates
    Use Calculators
    • Debt consolidation calculator
    • Net worth calculator
    • Personal finance calculators
    • Cost of living calculator
    • All calculators
    Get Advice
    • Retirement advice
    • Debt management
    • Improve your credit score
    • Career resources
    • Tax advice
    • Insurance basics
    • Real estate tips
    • Personal finance glossary
  • Retirement
    Get Advice
    • Best Roth IRA accounts
    • Best retirement plans
    • How to open a Roth IRA
    • 401(k) rollover guide
    • Roth IRA vs. Roth 401(k)
    Use Calculators
    • 401(k) retirement calculator
    • Retirement savings calculator
    • Roth IRA calculator
    • IRA minimum distribution calculator
    • Social security benefits calculator
    • All retirement calculators
    More Information
    • What is an IRA?
    • What is a Roth 401(k)?
    • 401(k) contribution limits
    • Contributing to IRA during retirement
    • Best age for Social Security retirement benefits
    • Roth IRA 5 year rule
  • Create Account
  • Dashboard
  • Alerts
  • Settings
  • Support
  • Logout
Share

7 baby steps to reach your retirement savings goals

Jeffrey Steele
October 23, 2017  in  Retirement

1 of 8

Mother holding her baby's hands as she learns to walk
NadyaEugene/Shutterstock.com
Baby steps to retirement savings

Babies crawl before they can walk. Their first step is the most important — it is the beginning of a lifetime journey.

If you know you should begin saving and investing for retirement, don’t worry about making a giant leap forward. Taking one small step toward retirement savings can lead to momentum.

“People don’t act if they don’t think their actions will improve their situations, so the whole concept of baby steps is a great idea,” says Dave Littell, retirement income program director at The American College.

Here are seven tips to march toward a rich retirement.

The Bankrate Daily

2 of 8

Man looking for book in a bookstore
Spencer Platt/Getty Images
Start with a learning experience

You want to get excited about retirement saving and investing. A baby step toward that goal is to educate yourself about the best ways to save and invest. “Learning something new can get you motivated,” Littell says.

He suggests beginners take courses in retirement saving and investing through local adult education programs. Next, do your own research.

Littell urges reading material online from the U.S. Department of Labor, including its Retirement Toolkit. The Consumer Financial Protection Bureau also offers a Planning for Retirement tool. And, of course, Bankrate’s retirement calculators can help you get started as well.

Make a point to learn the most appropriate saving rate for you. If you are saving for 30 years toward retirement, it is recommended you save 15 percent annually, including both employer and employee contributions, Littell says.

3 of 8

Neatly organized desk with a blank notepad
tab62/Shutterstock.com
Create a simple financial plan

Take another baby step forward by creating a simple financial plan.

Recognize that creating a financial plan does not have to mean you’re saving for yachts and a retirement in the South of France, says Craig Bartlett, division consulting manager for U.S. Bancorp Investments.

A financial plan can be the blueprint for having X amount of dollars saved by age 30 or any other life stage. “By looking at a shorter time frame and a more modest goal, it becomes far less daunting,” Bartlett says. “That’s because you’re not focusing on 50 years, but on five years — or even less.”

Keep in mind the plan is simply a piece of paper. “It’s the process behind it, of regularly reviewing it to make sure you’re on track, that’s important,” Bartlett says.

4 of 8

Woman working out at the gym
Tara Moore/Getty Images
Equate saving to exercising

Saving money is like working out, says Gina McKague, president and CEO McKague Financial.

Many say they skip exercise because they don’t have the time, but it’s likely they could find time if they tried. It’s the same thing with saving, McKague says.

Fitness experts advise taking an approach that will keep you exercising, whether it’s working out at a health club or at home. Good savers follow similar regimens that work for them. McKague clips coupons and uses the “24-hour rule” on large purchases, pondering a purchase for a full day before buying.

“These make an impact over time and create a frame of mind,” she says. “When you see growth, you’re eager to continue going that route. It’s like seeing progress from working out and wanting to get to the gym.”

5 of 8

IPhone home screen
iStock.com/Carolyn Woodcock
Let an app guide your finances

If you don’t trust your saving discipline, you can enlist an ally in developing such self-control through a mobile app such as Digit or Level Money.

Because it is simple to use and links to a single bank account, Level Money is particularly well-suited to retirement savings newbies, McKague says.

It uses a basic algorithm that reads your expenses and takes a portion out of your leftover funds, she says. “It will automatically move a few dollars every few days into savings accounts. It’s not going to be really impactful, but it allows you to create a frame of mind to become a saver. We know we need to save, but we can’t always see where all the expenses come from. This puts it into perspective for us.”

6 of 8

Person looking up optimistically
Adriana Duduleanu/EyeEm/Getty Images
Focus on the upsides

Too many calls to save and invest emphasize the negatives, such as the fear of outliving your savings or having to work until you are 80. Those negatives deaden the will to get started.

But focusing on the positives, such as the enormous wealth you can generate by starting to save early, builds excitement and motivation, says Gene Natali Jr., co-author of “The Missing Semester,” a book designed to help young people take ownership of their financial futures.

College students he meets with “get excited seeing the opportunities if they save a dollar a day,” Natali says, adding that focusing on such positives can help beginning savers of any age. “Use the positives to conquer the negatives.”

7 of 8

Woman smiling
Chad Springer/Image Source/Getty Images
Open an IRA

If your employer doesn’t offer a tax-advantaged retirement savings program, such as a 401(k), you can start one yourself by opening an IRA.

There are two common types of IRAs:

  • Traditional IRA: This account offers a tax deduction for the tax year in which the contribution was made.
  • Roth IRA: This account gives investors the chance to invest money after taxes and then take the contributions and earnings out tax-free in retirement.

The annual contribution limit for an IRA is $5,500 for 2017, and you have up until the April tax deadline to make contributions for the 2017 tax year.

Some companies require a minimum deposit of $1,000 to $3,000 to open an IRA, but there are some accounts available with lower minimums. Put your money to work in a high-yield savings account while you build up a deposit.

8 of 8

Game with sliding blocks
Joseph Clark/Getty Images
Replace ‘get it right’ with ‘get it started’

Some would-be retirement savers and investors never get started because they assume they must have the perfect plan right from the start. That thinking is misguided, says Ken Sutherland, a registered investment adviser and founder of LifePlan Group.

“My take is, keep it simple,” he says. “Don’t try to get it right. Just get it started; build a habit of saving.”

Start by depositing 5 percent of your take-home pay into a savings account. If your paycheck is automatically deposited, transfer that money from checking to savings automatically. If you have a 401(k), save up to the level at which your employer matches your contribution — and beyond, if you can.

The younger you are, the more sense it makes to fund a Roth IRA, Sutherland says. “Once a year before doing your taxes, transfer your savings to a Roth,” he adds.

Related Links:
  • 9 savvy ways to withdraw retirement funds
  • How to crack open your IRA without triggering a tax penalty
  • Avoid these 8 common IRA mistakes by knowing the rules
Related Articles:
  • Investing a surplus of money
  • 7 investment mistakes
  • Why go to a Roth IRA?

You may also like

  • 5 things you must do if you hope to retire at 62

  • 7 must-have personal finance apps for iPhone

  • A decade-by-decade retirement investing plan for you

  • 5 valuable reasons to hire a retirement planning adviser

  • 8 common IRA mistakes that are easily avoidable

  • Use income from your sideline business to grow retirement savings quickly

  • About Us
  • Press Room
  • Contact Us
  • Careers
  • Advertise With Us
  • Latest News
  • Popular Topics
  • Glossary
  • Compare Rates
  • Understand Bankrate's Averages
  • Privacy Policy / Your California Privacy Rights
  • Terms of Use
  • GLBA Annual Notice
  • Licenses
  • Sitemap
How we make money

Bankrate.com is an independent, advertising-supported publisher and comparison service. Bankrate is compensated in exchange for featured placement of sponsored products and services, or your clicking on links posted on this website. This compensation may impact how, where and in what order products appear. Bankrate.com does not include all companies or all available products.

Maximize Your Money. Get Expert Advice & Tools. Master Life's Financial Journey.

You have money questions. Bankrate has answers. Our experts have been helping you master your money for four decades.

Our tools, rates and advice help no matter where you are on life’s financial journey.

Facebook logo Twitter logo
Follow Us

Bankrate, LLC NMLS ID# 1427381 | NMLS Consumer Access
BR Tech Services, Inc NMLS ID# 1743443 | NMLS Consumer Access
© 2019 Bankrate, LLC a Red Ventures Company All Rights Reserved.

United States United Kingdom