15 Retirement Savings Rules to Live By

In an ideal world, retirement will be a time to enjoy the fruits of a lifetime of labor. But if you have too little retirement savings, you could find yourself spending your later years struggling.

To make sure your retirement isn't full of financial stress, follow these 15 critical retirement savings rules.

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If you are counting on Social Security to fund your retirement, you're going to have financial problems. Most retirees need to replace about 80% to 90% of their preretirement income. Social Security is intended to provide only 40% of the amount you were earning.

Check your Social Security benefits online to get a realistic idea of what role these retirement benefits will play in supporting you during your later years so you can make informed choices about how much supplementary savings you need.

It's a sad fact of life that seniors tend to require more medical care than younger Americans. Medicare helps cover the costs of healthcare services, but there are things that aren't covered. And there are copays and coinsurance costs to worry about.

When planning for retirement, research how much money you'll likely need to spend out of pocket on medical care, and take this number into account when you set your savings goal.

The location where you'll spend your retirement can make a huge impact on how much money you need invested.

Some areas have a much higher cost of living than others. You'll need to supercharge your savings if you plan to settle in one. There are also different tax rules for retirees, with some areas taxing Social Security and others not assessing taxes on these benefits.

Think about where you'll settle down before you set your savings goals -- or before you decide you have enough to leave the working world behind.

ALSO READ: 13 States That Can Tax Your Social Security Benefits

Knowing your end goal when it comes to retirement savings is only half the battle. It's equally important to calculate how much you must save each month in order to achieve it.

Calculators on Investor.gov can help you determine exactly the amount you must invest every month based on your retirement timeline and the desired size of your nest egg.

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Your chosen retirement age affects many aspects of your finances in retirement. It can impact how much money you get in Social Security, how long you have to save for retirement, and how long you have to achieve your savings goals.

Unfortunately, many people plan to work late in life but don't end up being able to do so. Health issues, family issues, or a lack of employment opportunities may get in the way.

To avoid ending up with too little retirement savings, err on the side of assuming you'll retire early in your 60s. If it turns out you're able to work longer, you'll end up with extra money.

ALSO READ: What to Do If You're Forced to Retire Before You're Ready

If you don't want to take a chance of falling short of your retirement savings goals, automating your savings is an important rule to follow.

If you set automatic contributions to your retirement account out of your paychecks, or out of your account on payday, you won't have the option to not save.

The money will get into your retirement accounts every month consistently, so you'll be sure to stray on track in your investing efforts.

If your employer offers a matching contribution to your 401(k), you should do everything in your power to meet the requirements to earn the full match.

Matching funds are free money. They provide the only chance to get a guaranteed return on your investment and they can go a long way toward achieving your savings goals.

The government actually wants to help you save for retirement, and there's no reason not to take advantage of its assistance.

You can claim tax breaks for retirement savings by choosing a tax-advantaged retirement plan such as a 401(k) or IRA. If you qualify for it based on your income, you can also claim the saver's credit, which provides up to $2,000 in free money for a married couple.

Because of the tax advantages these retirement accounts offer, it's a good rule of thumb to always choose an account that provides tax breaks rather than a taxable brokerage account.

You have a choice of accounts that provide tax benefits, so it's important to always research which type of account makes the most sense for you.

A 401(k) that comes with an employer match should always be your first choice. But IRAs provide benefits that 401(k)s don't, such as a broader choice of retirement investment options.

You'll also have to decide between a traditional 401(k) or IRA, which allows tax-deductible contributions but requires taxes to be paid on withdrawals, or a Roth account that requires after-tax contributions but allows tax-free withdrawals.

A Roth is typically a better choice if you think your tax rate will be higher later, while a traditional is generally the right option if you expect your tax rate to go down in retirement.

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Riskier investments tend to provide a chance at higher returns but greater potential for losses. Safer investments reduce the chance of losing money, but you won't generally have the chance to maximize your return on investment with them.

You'll need to consider how risk tolerant you can afford to be based on your retirement timeline and your general comfort level with seeing temporary losses.

Your risk tolerance determines how your assets should be allocated. But because the level of risk you should take on will change over time, it's important to regularly rebalance your portfolio. You also need to rebalance because if some investments perform better than others, you could end up with too much of your money concentrated in a particular investment type.

You should rebalance at least once per year to ensure your money is invested appropriately and you aren't being too conservative or too aggressive with your investment strategy.

ALSO READ: Balancing Your Portfolio: How and When

When making retirement plans, and before leaving the workforce, you need to decide how much you can safely withdraw from your retirement accounts. This will give you an idea of how much income your nest egg can provide based on your account balance.

The 4% rule is a classic strategy, which allows you to withdraw 4% of your account balance the first year of retirement. Then, each year thereafter, you can increase withdrawals to keep pace with inflation.

This isn't the right strategy for everyone, but the important thing is you pick a withdrawal rate that reduces the chance of your account running dry.

If you're married, you and your spouse should make retirement plans together.

Decide on a joint savings strategy, work together to maximize your combined Social Security benefits, and plan for how you'll spend your later years so you can make sure you have the funds you'll need.

Finally, the last key rule to follow when it comes to retirement savings is not to tap your accounts too early.

You don't want to take a 401(k) loan if you can avoid it, as you'll reduce your potential returns and risk facing early withdrawal penalties if you can't pay the money back as planned.

And early withdrawals come with a 10% penalty in most cases, plus you lose out on all the potential returns the money could've earned if you'd left it invested. You don't want to put your retirement at risk by raiding your accounts, so leave the money invested once you've saved it.

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Following these rules will help to ensure you have plenty of money in the bank by the time you reach retirement age. Start implementing them in your life today so you can grow a nest egg that gives you the chance to enjoy a life free of financial worries after leaving work.

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