Everyone has a vision of their retirement in their heads. It could be the quintessential condo in Florida, moving closer to the grand kids or taking off to travel the globe — but whatever it is, you won’t get it for free.

To live the retirement you want — for the full 20 or more years after you stop working — you need to plan ahead and work to save enough money to cover your costs. The first step in the planning process is deciding what you want to do in your retirement. Once you know that, you can calculate your anticipated retirement costs and work on a plan to save enough to carry you through your golden years.

Taking these steps can potentially make it easier for you to reach your savings goals by the time you’re ready to retire.

Max Out Your 401(K) Contributions

It may seem like a no-brainer, but many people leave money on the table when it comes to their employer-sponsored retirement accounts. According to research by Financial Engines, only about one in four employees took advantage of the full match their employer offers. Those who didn’t take advantage missed out on an average of $1,336 annually.

Make Tax-Savvy Investments

Taxes can eat away at your returns — and how much you will have to live on in retirement. While taxes aren’t avoidable, there are ways to potentially reduce the burden you face. Some strategies recommended in appropriate situations by tax advisors include paying attention to your mutual funds’ turnover rates, pairing the sales of winning stocks with losing ones to reduce your capital gains tax, and keeping interest- and dividend-generating investments in a tax-deferred account such as a 401(k) or IRA. You should consider consulting with your tax advisor to see if these or other strategies are right for you.

Pay Down Debt

Debt is the enemy of all savers, but for people nearing retirement it can be particularly perilous. With income limited, covering living expenses and activities is going to be hard enough. Add on high-interest debt and you may find yourself downsizing your lifestyle to pay your monthly bills. Work on paying down your debt by tackling the accounts with the highest interest rates first. And don’t stop saving for retirement while you do.

The Bottom Line

It’s possible to have the money you need to live the retirement you want, but it requires advance planning and careful savings over the course of your working life.

2018-261911 Exp. 6/22/2020