1. Adopt a savings mindset. Look at putting retirement money away as paying yourself first. Decide how much to contribute each paycheck, and then have your employer direct deposit the amount into your retirement account. Experts suggest 8% to 10% of your income. Come up with the number by making a budget for all your expenses and other savings, and then deduct this from your net income.
2. Sign up for your employer's 401(k) or 403(b) plan. Contributions are tax-free to certain limits. Employers often match your contribution, so put in enough to qualify. Seek professional advice in choosing investment options.
3. Set up an Individual Retirement Account (IRA). If your employer doesn't have a 401(k) or 403(b) plan, open an IRA or a Roth IRA, or a SEP IRA if you're self-employed. There are different requirements and limits for how much you can contribute tax-free. Consult a tax professional for details about any investments with tax implications.
4. Take advantage of bigger benefits as you get older. Once you reach 50, federal regulations let you contribute more into tax-advantaged retirement accounts to let you "catch up." Seek professional advice on this, but most experts recommend putting in the maximum allowed.
5. Start an emergency fund. This is for emergency expenses, such as major home or vehicle repairs, or to help pay the bills between jobs. You don't want to touch your retirement account because you could lose tax benefits or pay withdrawal penalties. Try to set aside 3 to 6 months of living expenses.
6. Save as much as you can. In addition to retirement and emergency accounts, cut expenses where you can and put money into a savings account you can draw on when you're no longer working.
7. Pay off credit card debt. Set up a pay-off plan now, so you won't have to use your retirement money. Once it's paid off, keep making those payments – into your savings account!