Saving for a successful retirement often seems next to impossible. Still, there are many steps we can take to significantly improve the odds that we will be able to retire well. In fact, your chances of retiring comfortably are very good if you stay disciplined about saving and investing. Start practicing these steps now:
Always have a savings cushion. Some people set aside an emergency fund just in case, while others have enough liquidity to weather emergencies that require cash. Either way, the idea is to not let any one specific event wipe out decades of hard work. Sure, you might not be able to maximize your returns when you set aside cash earning nothing, but you won't ever have to fire-sale your investments, or worse, your home, if you happen to lose your job just as the economy is tanking.
Save early and often. Financial wealth is the result of accumulating money and letting that stash grow through investments over time. The more you accumulate, the less time you need to reach a specific number. Conversely, even small amounts can grow to huge amounts over decades of time. Keep doing both for enough years and you'll soon realize that getting rich slowly is the easiest and simplest way to achieve financial independence. The good news is that this method of striking it rich is available to everyone who is willing to save.
Pay yourself first. One of the best ways to save is to pay yourself first. Whether it's through 401(k) contributions or automatic investment plans, having that money put aside before you even have a chance to decide whether to save or to spend is an extremely easy way to save more.
Do what you can to avoid a last-minute setback. Whether it's a huge medical bill, a stock market crash or getting in too far over your head with a huge mortgage, soon-to-be retirees need to dial down the risk when retirement is in sight. You cannot control every outcome, but there are certainly many little ways to reduce your risk of having something bad happen to your financial situation. Are you eating healthy and exercising regularly? Do you have adequate health insurance? Are you investing too much of your liquid assets in the stock market and not enough in fixed income? Do you actually need and can you really afford that big of a house? Spend some time to make sure you are well prepared in case anything happens, and you'll have a much greater chance of achieving a successful retirement.
Spend time with tax planning. It's unfortunate that our tax system is so complicated. It often takes a lot of effort to find all the tax breaks that you might be entitled to. Spend some time reading and analyzing your situation so you will ultimately pay the least amount of taxes and grab the most tax deductions. Are you better off converting your pre-tax assets to a Roth IRA? When should you take Social Security and money from your IRAs to maximize your after-tax income? Since various investments are taxed at different rates, can you move funds around within different types of accounts so you can pay less tax on your gains, dividends and interest?
Cultivate relationships. People who have great relationships with coworkers are not only more productive, but they also get more opportunities. Let's face it: Everybody would much rather help someone likable than someone who seems to always be on everybody's nerves. Plus, people who have good relationships with others are happier.
A comfortable retirement often seems difficult to achieve. But those with the discipline to persistently save and invest are still going to accomplish their retirement goals.
David Ning runs MoneyNing, a personal finance site that shares money moves you can make to significantly increase your chances of having a comfortable retirement. He likes to share simple changes that anyone can make, such as picking the best online savings account and figuring out whether a 0 percent balance transfer credit card makes sense.