Start saving for retirement early<\/h2>\n\n\n\n
In your late teens and early twenties, retirement is probably the last thing on your mind. If you\u2019re lucky, you\u2019ll get advice from an experienced person to start retirement accounts and put the maximum allowed amount in them \u2013 that\u2019s good advice.<\/p>\n\n\n\n <\/p>\n\n\n\n If your employer offers a 401(k), put money into it and request matching funds from the company if offered. You can also invest in an Individual Retirement Account<\/a> (IRA). These come in many forms. Some are tax-deferred, allowing you to pay taxes at a later date when your taxable income may be lower than today. Others are not tax-deferred, allowing you to avoid paying taxes on these funds when you withdraw them during your retirement.<\/p>\n\n\n\n Starting to save early is ideal. The earlier you start saving, the more your retirement savings will grow. In addition to establishing long-term savings habits, you may want to learn about what other investment options are available to you. Explore how your retirement savings will grow over time to help you reach your retirement goals.<\/p>\n\n\n\n <\/p>\n\n\n\n When considering how much to save for retirement<\/a>, common advice is to \u201csave as much as you can.\u201d Although this is great advice, it\u2019s not terribly useful. It\u2019s far more helpful to take a practical approach and base the goals for your retirement savings on your future needs.<\/p>\n\n\n\n Establish a retirement budget with expected expenses and income in mind. Do your best to account for the effects of inflation and changes in your spending needs. It is generally suggested that retirees have expenses averaging 75% to 80% of those during their working years. However, don\u2019t rely exclusively on this rule of thumb; use your personal expectations.<\/p>\n\n\n\n Although your expenses will likely decline in retirement, it\u2019s probable that your income will also be reduced. Your total retirement income, including estimated withdrawals from savings sources, will need to meet or exceed your expected expenses for as long as you are retired. If you anticipate that other sources of retirement income won\u2019t cover your needs, you will need to increase your current retirement savings<\/a>.<\/p>\n\n\n\n One important retirement planning step involves comparing your current taxable income and your expected retirement income to estimate your tax rate now vs. later. This will help you make decisions on whether to use taxed or tax-deferred investments to reduce your lifetime tax burden.<\/p>\n\n\n\n <\/p>\n\n\n\n It\u2019s also important to consider the question: \u201cWhen is the best time for me to retire?\u201d The longer you wait to retire, generally the more value you\u2019ll receive annually from retirement accounts, social security payments and other retirement income sources. If you plan to retire early, you may receive lower benefits and you\u2019ll need to have more money in your retirement accounts to ensure you don\u2019t run out of savings during retirement. Check with the Social Security Administration for retirement estimators<\/a> and other resources.<\/p>\n\n\n\n A financial planner or online retirement calculator can help you input assumptions to create multiple \u201cwhat-if\u201d scenarios. Any gap you have in expenses minus annual income is the amount of your target annual retirement savings. Multiply this by the number of years you expect to be retired to calculate how much to save for retirement.<\/p>\n\n\n\n Another key retirement planning step is to figure out how you will be using your retirement accounts for expenses.<\/p>\n\n\n\n Consider consulting a tax professional to discuss your specific financial situation. This article is for informational purposes only and is not intended as a substitute for professional advice. Articles may contain information from third parties. Nothing contained in this article shall give rise to, or be construed to give rise to, any obligation or liability whatsoever on the part of Discover, a division of Capital One, N.A., or its affiliates.<\/p>\n","protected":false},"excerpt":{"rendered":" Start saving early, make a plan, and determine how you\u2019ll use your funds.<\/p>\n","protected":false},"author":15,"featured_media":22571,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[88,7,89],"tags":[114,55,30,118,121,110,27],"class_list":["post-16199","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-living-in-retirement","category-retirement","category-saving-for-retirement","tag-401k","tag-financial-goals","tag-ira","tag-retirement-basics","tag-retirement-income","tag-retirement-planning","tag-saving-for-retirement"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/posts\/16199","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/comments?post=16199"}],"version-history":[{"count":15,"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/posts\/16199\/revisions"}],"predecessor-version":[{"id":22572,"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/posts\/16199\/revisions\/22572"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/media\/22571"}],"wp:attachment":[{"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/media?parent=16199"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/categories?post=16199"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-json\/wp\/v2\/tags?post=16199"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}![\"Father](\"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-content\/uploads\/2017\/09\/The-Reality-of-Retirement-Planning_1-INARTICLE-e1505757989816.jpg\")
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<\/figure>\n\n\n\nPlan for retirement<\/h2>\n\n\n\n
![\"Newly](\"https:\/\/www.discover.com\/online-banking\/banking-topics\/wp-content\/uploads\/2017\/09\/The-Reality-of-Retirement-Planning_3-INARTICLE-e1505758102790.jpg\")
<\/figure>\n\n\n\nUse retirement funds<\/h2>\n\n\n\n
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