For many people, retirement is a major goal and represents a life milestone. Unfortunately, 35% of American workers feel significantly behind when it comes to their retirement savings, according to Bankrate’s 2024 Retirement Savings Survey.

The good news is it’s never too late to open a retirement account — or to boost your savings if you already have one. Whether you’re fresh out of school or approaching your golden years, you have options when it comes to planning for retirement. If you’re not sure where to begin, a financial adviser can help you develop a plan that aligns with your time horizon, risk tolerance and goals.

Here are some steps to help you get started planning for retirement.

1. Figure out how much money you’ll need

First, figure out what kind of life you want to live during retirement and how much money you’ll need to get there. In general, many financial experts recommend saving 10% to 15% of your income for retirement, but this isn’t a hard rule.

Another rule of thumb is to have a certain amount of your income saved by a particular age, following these guidelines:

—In your 20s, take advantage of starting early by attempting to save 10% of your pay.

—By 35, try to have two times your salary saved in retirement accounts.

—By 45, aim to have four times your earnings saved.

—By 50, your savings should be six times your earnings.

However, remember that everyone’s retirement goals differ. How much you will need depends on a number of factors, including your health status and lifestyle. Regardless, the first step is to determine what you want your retirement to look like.

Sometimes, writing your goals down can be helpful. Bankrate’s retirement calculator can also help you figure out how much you may need.

2. Open a traditional IRA

“The easiest way to get started with a retirement account is to set up an IRA,” says Dan Sudit, partner at Crewe Advisors in Salt Lake City.

With an IRA, anyone with earned income can get one, and you don’t have to rely on an employer to provide a plan. Then you can go to a popular financial institution such as Charles Schwab or Fidelity Investments — or the best brokers for IRA accounts — and set one up in minutes.

The traditional IRA allows you to deduct contributions from your taxable income, meaning you won’t pay taxes on them, if your income is below a certain level. Contributions and gains can grow tax-deferred for years before having to pay taxes when you withdraw the money during retirement. Contributions are limited to $7,000 in 2025, though those age 50 or older can add an additional $1,000.

And there are even a few other benefits for those opening an IRA.

“Many people are unaware that for a married couple, even a nonworking spouse may be able to make tax-deductible contributions to a traditional IRA,” says Sudit. It’s called a spousal IRA.

Plus, if your income is low enough, you may qualify for an additional tax credit called the Saver’s Credit.

3. Open a Roth IRA

A Roth IRA is a different type of IRA that can offer you some attractive benefits as well. With a Roth IRA, you make contributions with after-tax money — so no tax deduction this tax year — but you’ll be able to grow your money tax-free and even take it out tax-free at retirement age.

Like the traditional IRA, you’ll need income to participate in a Roth IRA, or you can have a working spouse that qualifies you for one.

The Roth IRA also has income limitations, meaning you won’t be able to open one if your income is above a certain level, though you can get around this with a backdoor Roth IRA.

The Roth IRA is a powerful retirement account, and it can offer powerful features such as the ability to pass down your nest egg tax-free to your heirs. That’s all part of the reason that many financial planners think the Roth IRA is the best retirement plan around.

4. Get your 401(k) in order

The new year is also a great time to refocus on your employer-sponsored 401(k) or get started on one if you haven’t already. The 401(k) plan — or its cousin, the 403(b) for government employees — provides a great way to save for retirement and comes in two varieties: the traditional 401(k) and the Roth 401(k):

—The traditional 401(k) allows you to save on a pre-tax basis, meaning you won’t pay income taxes on any contributions. You’ll be able to grow your money tax-deferred, and you’ll pay taxes only when you withdraw your money in retirement.

—The Roth 401(k) lets you save on an after-tax basis, meaning you’ll pay taxes on any contributions. However, you can grow your money tax-free, and you’ll never have to pay tax on qualified withdrawals in retirement.

And unlike an IRA, “there are no income limits for making contributions to a 401(k),” says Jonathan Cahill, CFP, wealth adviser at Crossgate Wealth Advisors in Yardley, Pennsylvania. But you cannot contribute more than you earn.

The maximum annual contribution to a 401(k) is $23,500 in 2025, and those aged 50 to 59 or 64 and older can add an additional $7,500 per year as a catch-up contribution. In 2025, those between 60 and 63 can contribute $11,250 as a catch-up contribution.

“Other benefits of a 401(k) plan include creditor protection, the ability to borrow against it or take early distributions without penalty for a first-time homebuyer,” Sudit says.

5. Maximize your employer’s 401(k) match

The 401(k) can give you a little extra juice, though, beyond just those contribution limits. That’s because many companies give employees matching funds for contributing to their account. In effect, you get an immediate return on your money. Here’s the fine print.

Employers often match a specific percentage of your contribution up to some maximum. For example, one employer might match the first 4% of your contributed salary at a full 100%. So if you contribute 4%, your employer kicks in another 4% and you’ll be putting away a total of 8%. Further contributions won’t earn you any extra match, however.

“We would certainly recommend you make contributions to that plan, especially if your company provides a company match,” says Sudit. “That’s free money.”

So it’s often an easy way to quickly boost your savings. However, many employers will require this match to “vest,” meaning you’ll need to stay with the company for a period of time, often three or four years, to claim the full benefit. Otherwise, you’ll likely end up with just a partial benefit, and the company will keep any money that remains unvested.

6. Pick your investments

So you’re taking advantage of the benefits of a retirement account — but what do you invest in? Sudit advises to focus on potential growth, “focus on long-term goals and what are the best investments over that period of time to get you there.”

One of the best long-term investments has been stocks, with attractive returns. The S&P 500, a collection of about 500 of America’s top companies, has returned about 10% annually over long periods. It’s highly diversified, which helps reduce your risk, and you can buy into the S&P 500 with just one low-cost index fund.

But even with the proven track record of solid long-term returns, stocks can be volatile in the short term. Those who are nearer to retirement may want to play it more conservatively, however, and own bonds as well. Bonds are less volatile generally than stocks and deliver regular income.

If your company offers a 401(k) plan, you may have access to an adviser who can help direct you and work with you to better understand how your investments fit into your retirement plan.

“If you don’t want the responsibility in picking out the funds and allocation, target-date funds can be a suitable option for you,” Cahill says.

Target-date funds automatically move your portfolio from riskier investments (such as stocks) to more conservative ones (such as bonds) over time. This process gives you more assurance that your money will be there when you need to access it in retirement.

7. Consider a financial adviser

If all of this seems overwhelming – or you just want an extra set of eyes to help you manage your investments – consider hiring a financial adviser to help you develop your retirement plan.

Financial advisers can help with general investment management, but they can do much more than that as well. Depending on your needs, they can help you with budgeting, getting insurance, goal-setting, taxes, estate planning and more.

Bankrate’s financial adviser matching tool can help match you with an adviser near you in minutes.

Bottom line

If you’re investing for the long term, it’s a great time to get your finances in order. Remember that often the hardest part is starting, but the sooner you do, the better off you will be. The more time you give your money to compound, the more you’ll have when that special day comes.

Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.

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