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3 Smart Retirement Savings Moves You Can Make Right Now

By Dan Caplinger – May 12, 2018 at 6:02PM

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The second one is something too few people do.

There's nothing more satisfying at the end of your career than being able to retire comfortably. But you can't expect the retirement you truly want if you don't save for it. With millions of people having no retirement savings at all, the burden is on you to take advantage of the many ways you can save for retirement effectively.

Successful retirement savers use a variety of different methods to set money aside for their golden years. The following three moves are smart for just about anyone, and the benefit they share is that you don't have to wait to get started with them.

Jar with sticky paper saying retirement on it, and cash pouring out on table next to calculator.

Image source: Getty Images.

1. Let the IRS help you out

Saving for retirement isn't just a matter of finding money to put aside. You also have to put it in the right place. The best option for those who have it is a 401(k) plan or similar employer-sponsored retirement plan. 401(k)s allow you to save money on a pre-tax basis, which can produce thousands of dollars in immediate tax savings. Many employers also add matching contributions or profit sharing on top of what you contribute from your paycheck, getting you even closer to your retirement goals without any extra effort on your part.

Even those who don't have access to a 401(k) or similar plan at work can still use an IRA to reap many of the same benefits. You have a choice between traditional IRAs that give you upfront tax deductions or Roth IRAs that promise tax-free distributions in retirement. Either way, with the tax-deferred growth that will help you retirement savings grow faster, IRAs and 401(k)s both put the IRS on your side in your quest toward building up a good-sized nest egg.

2. Check out what Social Security will do for you

Social Security will play an important part in your financial security in retirement. It's one of the only financial resources you'll have that promises an unending stream of monthly payments that lasts throughout your lifetime, and it also can help support a surviving spouse or other family members even after your death.

It's easy to get a sense of what to expect from Social Security. Check out the Social Security Administration's my Social Security website, and you'll see a key resource for information about what your monthly benefits will be under various assumptions. You'll also learn how much you could receive if you become disabled before reaching retirement age, as well as what a spouse or children would collect. The service is free and easy to access, and it'll give you a much better sense of how much you really need to draw from your savings to cover all your financial needs once you retire.

3. Pre-plan your spend-down strategy

Most retirees are reluctant to spend down their retirement savings after their careers end, as they fear they'll run out of money too soon. That's a legitimate concern, but you also don't want to shortchange yourself by spending less than your retirement savings could support.

Following two simple steps can give you a better strategy for spending your nest egg in retirement. First, realize that even once you retire, you'll still need to invest so that some of your money will keep growing. With retirements that can last 30 years or longer, that growth will be crucial to sustaining your financial needs later in life. Second, giving yourself a cash cushion that will take care of a year or two of expenses can help you weather any market downturns that temporarily send your portfolio lower. Under ordinary circumstances, you can use a system like the 4% rule to replenish that cash during good market years, but not having to sell during market crashes gives you the peace of mind you'll need to stay invested for the long run.

Remember, it's about you

Financial security isn't just about numbers. It's about what makes you emotionally comfortable as you move forward with the rest of your life beyond work. By looking at these three things, you'll be more likely to have the confidence and comfort you need to retire the way you want when the time comes.

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