Ceri Austin 
Saving for retirement can be a difficult undertaking. Advisors generally suggest that by age 50 you should have saved at least six times your current annual salary in savings accounts.
Eliminating high-interest debt can free up cash for saving, as can limiting spending – for instance, Americans spend 13% of their budget on housing but waste 30% of food they purchase!
1. Set a Goal
First step to saving for retirement: determine how much you need. Your current budget can help determine this figure by looking at short-term goals and tracking how you spend money.
Consider your expenses during retirement and how they will change with inflation. Debt repayment and healthcare costs could become burdensome, for example. Create an emergency savings account as protection against unexpected expenses – life is rarely linear! Don’t get discouraged if setbacks arise – be proactive instead and strive to overcome them!
2. Pay Off Debt
Debt can be daunting, but you should avoid giving up retirement savings to pay it off. Unless the interest rate on your debt exceeds what your investment account can produce in returns, it may be better to save for retirement and let compounding work its magic over time.
Experts advise putting away 15% of your pretax income annually toward retirement (including any employer matching contributions), including any 401(k) contributions that may be possible.
3. Create a Budget
Budgeting is one way to help ensure that expenses don’t outstrip income, and should be especially detailed for retirement planning purposes.
Beginning by reviewing bank statements, credit card bills and past receipts to gain insight into your spending habits. Next, separate expenses into categories; some expenses will remain constant such as utilities or groceries while others may vary (such as entertainment).
Assume you will be drawing income from investments such as 401(k)s and IRAs, social security payments, rental earnings and any inheritance funds during retirement. Use a spreadsheet to track these numbers so you can calculate what your budget should look like for retirement expenses.
4. Consolidate IRAs
Over their careers, workers may accumulate retirement accounts at multiple companies. This makes it more challenging than ever to track fees and implement tax-efficient strategies.
Consolidating IRAs can simplify account maintenance by decreasing the number of statements, forms, and fees to be filed annually. Consolidation may also decrease commission expenses while encouraging use of lower cost funds.
Before consolidating IRAs, it’s essential to remember that moving funds between accounts may alter their investment performance and potentially trigger an RMD penalty.
5. Save Your Tax Refund
Standard rule of thumb suggests having an emergency fund that covers at least three months’ expenses, yet many find it challenging to save enough to achieve their financial goals. A tax refund could provide an invaluable boost to your savings efforts.
Investment of your tax refund into an individual retirement account (IRA) may reduce taxable income depending on your income levels.
Your tax refund could also help reduce debt interest fees and payments. Doing this will bring one step closer to becoming debt free while increasing peace of mind.
7. Put All Your Extra Money in Your Retirement Account
Given pensions are becoming a thing of the past and Social Security only covers part of preretirement income, saving for retirement has never been more crucial. Here are a few strategies:
Save as much of your paycheck as possible into an employer-sponsored plan that offers matching contributions, or open an IRA and invest in mutual or exchange-traded funds to diversify your portfolio.
Eliminate high-interest debt such as credit cards, auto loans and personal loans to free up additional cash for saving. Cut living expenses by downsizing housing payments, utility fees, taxes and cost of living increases.
