Tons of people like me worry about their retirement plans. They wonder if their portfolios are diversified or if they are paying too much in fees. They also are worried they may not have enough on the big day when they decide to call it quits on the working world.  Here are a few tips that will help to make sure that you are doing enough when saving for retirement.

Save More than You Need for Retirement

One of the ways to ensure that you have enough money to retire and stay retired is to save too much money. Since the future is so uncertain, I highly suggest socking away enough money to cover you even in bad situations.  If the market crashes 2 years before you planned to retire, wouldn’t you want enough padding to know you won’t have to change your retirement plans?  It is much better to have an overfunded retirement plan than to have an underfunded one in my opinion.

Save Your Raises for Retirement

An easy, pain free way to save for retirement is to simply save your raises. Many jobs give an annual cost of living adjustment each year. Not mine, but many.  This normally averages 2%-3% or even more for some very hard working and lucky people.  If you pretend like you never got the raise and add this extra to your 401k plan, you will be squirreling away quite a bit extra without ever taking a huge financial hit to your paychecks.

You survived the previous year without the extra money, so you may be able to survive the coming years too.  Obviously you may actually need a cost-of-living adjustment sometimes, but whenever you can do without, this would be huge for your retirement savings.

Make Saving for Retirement Automatic

Even I cannot mess up an automated retirement savings plan. Some people have trouble saving money.  An automated savings plan takes it completely out of a person’s day-to-day control.  If your retirement contributions are automatically squirreled away in your 401(k) or IRA, it is much harder for you to get in the way of your own savings goals.

To give myself a little investment flexibility, I automatically contribute the minimum to my 401(k) to get the maximum company match (6%) and also automatically contribute $300 a month to our first Roth IRA.  We manually move the rest of our investment cash to a separate savings account and throw it into the mix after a big market drop or towards the end of the year if we never see a fantastic time to invest.  So far, sadly, 2007-2011 has had some very prime investment periods.

Max Out Your Retirement Savings

If you want to supercharge your retirement savings, be sure to max out your retirement plans. Saving the maximum amount each year helps to ensure that you will have enough in your retirement portfolio to meet your retirement goals. Remember that any year that you don’t max out your 401k plan is a year of investment opportunity that you won’t get back.

My husband and I personally believe in the long-term value of Roth IRA’s for our future retirement needs.  We are only 28 and do think our tax rates will be higher 30 years down the road.  Since we don’t make enough to max out two Roth IRA’s AND my 401(k), I do get the maximum company match in my 401(k) but do not contribute the $16,500 I can every year.  I fully fund our two Roth IRA’s instead.  Sometimes you just have to prioritize your retirement needs and balance them against your current ones as well.

Start Saving for Retirement Early

Younger investors have the best chance to save a lot of money for retirement. They usually make a lot less money than employees in their 50’s and 60’s, but they literally have time on their side.  A young investor’s retirement account has the potential to grow exponentially over a 30 year time period, so the earlier that you start saving for retirement, the better.

What other great retirement savings tips have I missed?  How do you ensure a happy retirement future?



Crystal Stemberger uses Budgeting in the Fun Stuff to write about finding the balance between paying your bills, saving for your future, and budgeting in the fun stuff along the way.