If you are in your twenties or thirties, this discussion probably has less relevance for you. But you can still gain some insights on what to do and not do for retirement planning. Those in their late forties or fifties will find some sound advice here.
It is Never Too Late.
Throwing up your hands in frustration and walking away from this topic is not a smart decision. You can build up enough of a retirement even if you are starting in your fifties. But, you have to begin now, and use techniques that will help you get to where you need to be in realistic terms.
Break Old Habits and Thought Patterns.
Set aside the spend it now` mindset for a saving for the future` one. This is likely going to be one of the more difficult challenges to carry out, but once begun it will begin to take hold and become easier over time.
Find ways to reduce expenses and debt so that you can begin to allocate as much money as you can towards building your retirement.
Use the Tools You Have.
The two financial vehicles that you will need to focus on are your 401k and IRA accounts. Your 401k is the best because of the company matching portion which gives you extra towards retirement without coming out of your pocket. Max out your contributions to this account if at all possible.
The IRA continues to be a wonderful way to save (tax deferred and post-tax) towards retirement. If you do not have a 401k plan, then use these accounts in place of them.
There is a way called catch up` contributions to save even more in the few years leading up to right before you retire. Be sure to ask about this with your employer or with the institution that handles your IRA.
Balance Risk with Reward.
At no other time is the need to view the risk part of your investment strategy so important. Since you are just getting started, you need to keep in mind that an aggressive risk strategy can open you up to losses that can be difficult from which to recover if the market takes a hit. So, choose your mix of stocks, bonds and mutual funds carefully. Remember that if you take a more conservative approach in your investment choices, you will end up with less at the end, but how much less is not near as important is that there is money there for you at retirement. You might have to adjust your lifestyle downward somewhat, but better that scenario than to have very little upon which to make your retirement plans.
In short, take a very realistic approach when it comes to starting late in your retirement strategy. Use clear thinking and keep in mind that it is NEVER too late to begin.