How to Save for Retirement

If you want to retire early or at least live comfortably during your retirement, then you need to know how to save for retirement. It is important to learn early and start saving early. You do not need a financial advisor or any fancy stock trading software. You simply need to set aside enough money and stick to a saving plan.

1. Determine how much you can save Ideally, you should be saving ten percent of your income for retirement. This may sound like an unreachable goal, but cutting out some petty expenses could really add up allowing you to save more. Also, when you get cost of living raises, or performance raises, sock them away instead of spending them. Tax refunds should also go straight to your retirement savings.
2. Open a 401K Most employers offer a 401K plan. If you work for  a nonprofit, like a hospital, then it is called a 403B. these are identical savings plans though. If your employer offers a plan, see how much they match. This is free money and it should be your first priority when deciding how to save for retirement. Assume that your employer matches three percent of your contributions. You should save up to the amount they match. So you contribute three percent, and your employer contributes three percent. A 401K is not the best savings option for retirement, so you are only going to save the amount that your employer will match.
3. Open a Roth IRA A Roth IRA is an excellent savings tool since the money you are contributing is post tax dollars. This ensures that if your tax bracket is higher at retirement, you do not pay higher taxes. Also, every dollar saved is a dollar you have at retirement. You won't have any taxes withheld when the money is distributed. You should save the remainder of your allotted retirement income in this account. Our earlier example said three percent would go into a 401K. If you are saving three percent of your income as you should try to, then the remainder seven percent of it should be in the Roth IRA.