If you’ve put off saving for retirement or saved less than you planned, consider the following steps to to help you work toward your retirement goals.

Make the most of retirement accounts

  • Try to contribute enough to your qualified employer sponsored retirement plan (QRP), such as a 401k 403(b) and governmental 457(b)) to receive any possible matching funds offered by your employer.
  • Whether or not you contribute to a QRP at work, you may want to also consider funding an Individual Retirement Account (IRA).
  • Consider opening an IRA if your employer does not offer a QRP, or if you are self-employed.
  • A Traditional IRA offers tax-deferred growth potential. You pay no taxes until you take a distribution. Depending on your income, your contribution may be tax-deductible.
  • A Roth IRA offers tax-free growth potential. Earnings are distributed tax-free, if the Roth was funded more than five years ago, and you are at least age 59½, or as a result of your disability, or using the first time homebuyer exception, or taken by your beneficiaries due to your death. Contributions are not tax-deductible, regardless of income.
  • If you’re age 50 or older, you are eligible to make an additional or “catch-up” contribution to IRAs and QRPs. A QRP catch-up contribution is an elective deferral that is made by a participant age 50 or older that exceeds a statutory limit, a plan-imposed limit, or the actual deferral percentage test limit for highly compensated employees. Visit irs.gov for more information. For more information, see our page on IRA Contribution Limits and Eligibility.

Save beyond your retirement accounts.

Contributing the maximums to your retirement accounts might be insufficient, particularly if you don’t have access to a QRP. Determine if you need to supplement your tax-advantaged savings with a regular, taxable investment account.

Start an emergency fund.

If you don't have a savings account for emergencies, you may want to start one so that you don’t have to dip into your nest egg to meet unexpected expenses. Many financial professionals recommend saving three to six months of expenses for emergencies.

Keep saving when changing jobs.

If you switch jobs, avoid cashing out your retirement savings. In addition to losing the tax advantaged status, distributions may be subject to ordinary income taxes as well as an IRS 10% additional tax for amounts taken early, generally before age 59½. By keeping your savings in a QRP or rolling it over to an IRA, your investments have the potential to grow over time. Even small-balance accounts can add up when they compound over many years. Please keep in mind that rolling over assets to an IRA is just one of multiple options for your retirement plan. Each of the following options has advantages and disadvantages, and the one that is best depends on your individual circumstances. You should consider features, such as investment choices, fees and expenses, and services offered.
  • Leave assets in a previous employer’s plan, if the plan allows
  • Roll over the assets into an IRA
  • Move the assets to a new employer’s QRP, if the plan allows
  • Take your money out and pay the associated taxes
When considering rolling over QRP assets to an IRA, factors that should be considered and compared between QRP and IRA include fees and expenses, services offered, investment options, when distributions are no longer subject to the 10% additional tax, treatment of employer stock, when required minimum distributions begin and protection of assets from creditors and bankruptcy. Investing and maintaining assets in an IRA will generally involve higher costs than those associated with QRPs. You should consult with the plan administrator and a professional tax advisor before making any decisions regarding your retirement assets.

Make the most of “new” money.

Consider putting part or all of any bonuses, tax refunds, or other lump sum payments into your retirement savings. Use direct deposit to put all or part of your tax refund directly into an IRA.

Check in with your investments.

Meet with a financial advisor each year to review your portfolio and asset allocation to make sure your investments are on track to help you meet your retirement goals.

Work longer.

Delaying your retirement will allow you to continue earning an income and defer Social Security until a later date — a date based on your individual situation. This may give you the opportunity to save more in your retirement account and receive larger monthly Social Security payments when you retire.

Manage expenses.

By efficiently managing your expenses, you can free up more of your income for retirement savings.
By making these retirement savings a part of your money management routine, you can begin to make up for lost time.

Saving enough for retirement?

Find out with My Retirement Plan, an online tool that makes it easy to see if you are on track.  After you answer a few questions, My Retirement Plan will calculate your retirement savings goal and recommend personalized next steps.

My Retirement Plan