Top 10 Things to Know About Retirement Planning
1.
Save as much as you can as early as you can.
Though it's never too late to start, the sooner you begin saving, the more time your money has to grow. Gains each year build on the prior year's -- that's the power of compounding, and the best way to accumulate wealth. 2.
Set realistic
goals.
Project
your retirement expenses based on your needs, not rules
of thumb. Be honest about how you want to live in retirement
and how much it will cost. Then calculate how much
you must save to supplement Social Security and other
sources of retirement
income.
3. A 401(k) is one of the easiest and best ways to save for retirement. Contributing
money to a 401(k) gives you an immediate tax deduction,
tax-deferred growth on your savings, and -- usually
-- a matching contribution from your
company.
4.
An IRA also can give your savings a tax-advantaged
boost.
Like
a 401(k), IRAs offer huge tax breaks. There are two
types: a traditional IRA offers tax-deferred growth,
meaning you pay taxes on your investment gains only
when you make withdrawals, and, if you qualify, your
contributions may be deductible; a Roth IRA, by contrast,
doesn't allow for deductible contributions but offers
tax-free growth, meaning you owe no tax when you make
withdrawals.
5.
Focus on your asset allocation more than on individual
picks.
How
you divide your portfolio between stocks and bonds
will have a big impact on your long-term
returns.
6.
Stocks are best for long-term
growth.
Stocks
have the best chance of achieving high returns over
long periods. A healthy dose will help ensure that
your savings grows faster than inflation, increasing
the purchasing power of your nest
egg.
7.
Don't move too heavily into bonds, even in
retirement.
Many
retirees stash most of their portfolio in bonds for
the income. Unfortunately, over 10 to 15 years, inflation
easily can erode the purchasing power of bonds' interest
payments.
8.
Making tax-efficient withdrawals can stretch the life
of your nest
egg.
Once
you're retired, your assets can last several more years
if you draw on money from taxable accounts first and
let tax-advantaged accounts compound for as long as
possible.
9.
Working part-time in retirement can help in more ways
than
one.
Working
keeps you socially engaged and reduces the amount of
your nest egg you must withdraw annually once you
retire.
10.
There are other creative ways to get more mileage out
of retirement
assets.
For instance, you might consider relocating to an area with lower living expenses, or transforming the equity in your home into income by taking out a reverse mortgage. Back
to Your Money: Guide to Better Retirement | 
