Introduction
Saving for retirement is important, and the sooner you get started, the better off you’ll be. This is true even if you’re a young adult starting your first job. Although retirement may seem far off, no one knows exactly what the future holds. You may be able to work for a very long time, or you may need to stop working suddenly due to health problems. Even if you can work as long as you want, there may come a time where you prefer to retire and travel, see the world, or enjoy your free time in any way that you please. We’ve put together this resource page to help you understand how to save for retirement and why it’s so important.
You don’t need to be a financial expert to start saving for your retirement. However, you do need some basic knowledge and an understanding of key concepts. With a little bit of knowledge and preparation you can put your money to work for you. One day you’ll look back and be a bit amazed at how much it grew! There’s no one size fits all when it comes to retirement. If you would like some help, by all means consider hiring a professional who understands the process and can guide you through it.
It’s also important to remember that planning for your retirement isn’t just about you. You’re also planning your family’s future. By planning ahead, you’ll reduce the chance of being financially dependent on your children in as you age. You’ll also increase the chances of leaving an estate behind that can help care for your family in the future.
Resources
We’ve put together a list of helpful resources to help you learn about saving for retirement. The resources are organized them by level of sophistication – the first set of resources are perfect for beginners, the second set cover more advanced topics.
Beginner Material
10 Ways to Prepare for Retirement
This ten step plan from the U.S. Department of Labor will get you thinking about important retirement concepts.
Retirement Topics – Benefits of Saving Now
It’s easy to hate the tax man, but this quick guide from the Internal Revenue Service does a great job demonstrating how money invested grows over time.
Retirement Goals: Plan Now, Play Later
Another useful beginner’s guide, this time from the Vermont Treasurer’s office. This is a PDF, so it’ll be very easy to print and hang onto.
Smart 401(k) Investing: Retirement Savings Overview
A 401(k) can be a very useful method of saving for retirement. Learn the basics from the Financial Industry Regulation Authority.
An annuity is an investment where you make an up front payment in exchange for a series of payments later on. Learn more from this guide created by the Securities and Exchange Commission.
Three Easy Ways to Boost Your Retirement Savings
These three tips from Investor.gov, a website maintained by the SEC, are simple but effective ways to increase your retirement savings. Very little effort required!
How Much to Save for a Secure Retirement
How much do you need to save to be financially secure? These articles by the Tennessee Department of Treasury and the Center for Retirement Research at Boston College provide a good introduction.
The Cost of Waiting: Start Saving Today
The earlier you begin saving for retirement, the longer you allow your money to work for you and the more it will grow. This special report by the City of Portland, Oregon does an excellent job of demonstrating this concept.
How to Prepare for Retirement at Any Age
It’s Never Too Late to Save for Retirement
Saving for Retirement: Why Start Now?
It doesn’t matter how old you are – if you aren’t saving for retirement, you should start.
An Early Start on Saving for Retirement
Saving While in Your Teens Leads to Big Cash at Retirement
Great explanations of why saving for retirement at a young age helps so much.
These rules of thumb provide a simple, easy to remember way of thinking about retirement planning.
Outlines different methods of saving for retirement.
Advanced Material
Retirement Readiness Study: Results of Federal Employee Survey (PDF)
Some Americans are prepared for retirement while others are not. This survey by the U.S. Office of Personnel Management can help you “create [your] own retirement readiness profile and take necessary steps to strengthen any identified weaknesses.”
Financial Education and Retirement Goals (PDF)
This paper, published by the Federal Reserve, demonstrates the importance of financial education in improving retirement planning. Those who learn about retirement planning, either through formal education or self-study, have better long-term results.
Behavioral economics is a fascinating subject. These paper outlines ways that our biases prevent us from properly planning for retirement and what we can do about it.
Can Americans Afford to Retire?
Are Americans Saving “Optimally” for Retirement?
Are Americans prepared for retirement? These papers paint a more optimistic picture than most.
Planning and Saving for Retirement
At the other end of the spectrum, this author finds that Americans are not saving enough.
Saving for Retirement: A Look At Small-Business Owners
This study suggests that small business owners are not adequately saving for retirement.
Saving for Retirement on the Path of Least Resistance
Interesting study of how default corporate retirement plans influence savings behavior. Here is the key finding:
Many plan participants allow the menu of investment funds to drive their asset allocation decisions. Most employees feel that they save too little, and many plan to raise their contribution rate in the near future, but few act on these good intentions. By contrast, employees do succeed in raising their contribution rates if they are given a low-effort opportunity to sign up for an automatic schedule of increases in their contribution rate.
Misunderstanding Savings Growth: Implications for Retirement Savings Behavior
People often underestimate the power of compound interest. This paper suggests that “making clear to employees the exponential growth of savings before they make crucial decisions about how much to save may be a simple and effective means of increasing retirement savings”.
Short answer: despite their problems, these worksheets promote good behavior because they’re both easy to use and understand.
Role of Home Equity in Retirement Saving: Building Your Nest (Egg)
Although your home equity can be very helpful in funding your retirement, it’s important not to rely on home equity alone. This honors thesis from a Colby College graduate explains why.
