In movies and TV, the image of retirement often involves kicking back on a beach with a frozen drink while looking out the ocean. But in reality, if you don’t have a retirement plan in place, it’s not only the frozen drink and ocean waves that are unrealistic — it will be much harder to even retire at all. 

Whether starting your retirement savings, continuing to accumulate a nest egg or even considering how to get going, here are a few things to keep in mind when it comes to saving for retirement. 


First, start by making a plan.

It seems basic, but having a plan can help you craft a viable path to retirement. Start by listing your goals, beginning with your desired retirement age. From there, figure out a monthly retirement budget that can meet your needs and wants. (Experts say you’ll need about 85 percent of your pre-retirement income in retirement.) Decide how long you’ll need your retirement fund to last, and you’ll be able to accurately set aside a certain amount per month to help you reach that goal. 

Here are a few ways you can maximize your retirement savings.


*Open a 401(k)

Many US employers offer a 401(k), which is an employer-sponsored retirement savings account. With a 401(k), you can contribute a designated portion of your paycheck to your account every month, allowing your retirement savings to accumulate while you go about your life. 

Employers can offer two different 401(k) options:

With a traditional 401(k), your contribution comes out of your paycheck before it’s been taxed. This brings down your annual taxable income, and you can also report amount as a tax deduction. Just keep in mind with a traditional version, you are taxed on the money when you withdraw it.  

With a Roth 401(k), your financial contributions are deducted from your income after taxes, so there’s no tax deduction available — but there are also no penalties for withdrawing when you eventually tap the fund during retirement. 

When it comes to a 401(k), there’s a maximum contribution amount per year based on age (see below). Keep in mind that pulling money out of a 401(k) before retirement can be challenging and come with tax penalties. So when you decide how much to set aside each month, ensure you still have enough of a monthly budget to cover expenses as well as an emergency fund.


*Check in to employee contributions.

Many employers sweeten their employee compensation packages by matching either your entire or partial contribution to your 401(k) accounts — up to a certain percentage of your salary. And with some employers, when you contribute more, they’ll match a higher percentage. Check in with your employer on matching contributions to take advantage of these bonus funds.


*Open an IRA

A traditional Individual Retirement Account (IRA) is a smart way to supplement any employer-based retirement plans. It’s a tax-free or tax-deferred way to save, as you can deduct your contributions on your annual tax return and you won’t pay taxes on the savings until you withdraw the funds during retirement. 

Similar to the 401k structure, with the Roth IRA, you contribute money after paying tax on it, but you can also withdraw tax-free when the time comes.


*Pay attention to contribution limits.

The older you get, the more you can put away. If you’re turning 50, and getting closer to retirement age, you can not only make higher annual contributions ($20,500 per year versus $19,500 per year), but you’re also allowed to make a $6,500 catch-up contribution the calendar year you turn 50, allowing for a big push toward your retirement goals. 


The most important tip of all: Start right away.

Saving for retirement is a long game, and the sooner you get started, the better off you’ll be. Remember that the market is bound to fluctuate, and dips and drops here and there are inevitable. If that happens, breathe deep and remember that every drop is followed by an eventual rebound.  

Look into these options, save smartly, and that dream of retirement won’t be such a far-fetched vision after all.