How to Start Saving for Retirement.

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By Jordan Martinez

Savings for Retirement

Saving for retirement is and could be one of the most significant decisions of your life. Not saving for retirement could mean your working well past the age of 62, or your standard of living when you can’t work anymore is heavily reduced to what it could have been if you just saved. If this stresses you out, don’t worry- about 6 in 10 people reported that it makes them feel stressed when asked about retirement. (Employee Benefit Research Institute) In fact, it doesn’t need to be stressful. There are ways to automate your retirement so you don’t feel stressed—more on that below.

But let’s start. Why saving for retirement is such a huge deal, how it could impact the rest of your life, and what you need to do!

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You’re Retirement Savings 401(k) and IRAs

A 401(k) is a workplace retirement plan. This plan lets you contribute a certain amount of your annual income into the account, and most companies would match a certain percentage of your deposits. Say your 401(k) is a 4% company match, and you have an annual income of $45,000. The amount you would invest for the match would be $1,800; your employee would then match, bringing your 401(k) balance to $3,600. $1,800 of free company money who doesn’t want that? You could also invest more into your 401(k) with a limit of $22,500 for the 2023 calendar year. You could also set up an automatic deposit into your 401(k) through HR, so you will never worry about contributing manually and forgetting.

Now an IRA is not that much different and was built for people who don’t have access to a traditional company-sponsored 401(k). Simply put, “An individual retirement account (IRA) is a long-term savings account that individuals with earned income can use to save for the future and enjoy certain tax advantages.” (Silberstein) Now, the investment vehicle you choose in an IRA is up to you, you could also hire an advisor or you could manually invest into which vehicle best suits you and your strategy. Some brokerages and banks also have an automation system which investments on your behalf depending on your strategy, risk level, etc. The popular financial investments you could use in an IRA include stocks, mutual funds, exchange-traded funds (ETFs), and bonds.

Retirement Savings Goal

Now goals are the hardest things to follow, and that’s okay. Less than 8% of people follow through with their New Years resolutions. But when it comes to your retirement, having a plan and sticking with it, either through automation or having professional advisory, is critical and could be the essential step of your life—not kidding! So, how much should you save? The adage was save about 5-10% of your income. We all now know that is insufficient. Financial experts suggest saving about 12-17% of your annual income. Now the goal for having a sufficient retirement supply is to multiply your expected/wanted yearly income for retirement (ex; $50,000) by 30 = $1,500,000. You need $1,500,000 to retire safely with a 4% livable withdrawal rate.

Automate your Retirement Savings

Automation could help save future retirees the hassle of manually controlling their savings/investments and forgetting about it. Setting up automatic payments to your 401(k) and IRAs is crucial. Now a different automation system you could use is roundups if you’re having difficulty getting going. Roundups round up every transaction you make and re-invest that amount for you. I’m not sponsored or affiliated with Acorns, but Acorns helps average investors with roundups. Now some banks have this feature built-in, and I’ve been using acorns and have saved nearly $200 in less than three months just from my transactional roundups. It’s a helpful tool to help get you going.

Remember, automation is a massive step for saving for retirement. Set it and forget it!

Investment Options

When opening an account through a brokerage, your company, or a bank, you have investment options to choose from. This step is just as critical as automation because the returns on these investments choose if you retired on time, late, or early. Let’s dive into it.

Savings Account: A savings account is a great way to store and hold cash safely. When it comes to the returns of savings accounts, they lack tremendously. The average interest rate/return on savings accounts is 0.16%; that’s less than a percent! There are savings accounts out there with 3% APY, but most of these are variable interest rates, meaning the company could change the percentage rate due to economic conditions. But remember, savings accounts are highly secure for storing money; they are just below government bonds in terms of security.

Bonds: Bonds, especially government bonds, are generally a secure investment compared to stocks. Before investing in any bonds, please do your research. Now bond prices are variable-if interest rates go up, bond prices go down, and vice versa. To lock in your rate, investors should hold on until maturity; if sold to another investor, the bond price may depend more or less on interest rates. Now how you get paid from bonds is that they pay out a coupon rate (interest) monthly, quarterly, or yearly, providing consistent income. Now with bonds, you are lending to the issuer the agreed face value amount, with the issuer promising to pay you a rate of interest (coupon rate) during the term of the bond. When the bond matures (the end of term), you receive the face value of the bond, plus the accumulated interest.

The average US 10-year Government Bond has an interest rate of 3.98%, the long term average for this bond is 5.89%. The average rate of a corporate bond (Moody’s Seasoned Aaa Corporate Bond Yield), which is riskier, is 4.56%.

Stocks: Now, stocks may offer the highest rate of return due to being the riskier asset. But the S&P 500, which is 500 of the largest publicly traded companies, has returned about 8-12% annually. With stocks they have the potential for higher returns when compared to bonds and savings. They are also highly liquid assets- you could easily buy and sell-hedge your investments from inflation and earn passive income through dividends.

IMPORTANT: Dividends often get overlooked when it comes to investing. But having a portion of your portfolio invested into stock/ETFs/Mutual Funds that give dividend payouts can help supplement your existing retirement plan. I’m affiliated with DividendStocks and what they provide you with is their top 100 dividend stock list which ranks stocks based on yield, growth, net income growth, value, payout ratio, and one-year return percentage. DividendStocks could help you narrow your search for dividend investments. They have a $9 monthly trial offer! So, please go check them out with the link here –

Exchange-traded funds (ETF) and Mutual Funds: Exchange-traded and mutual funds are created with many different assets inside the fund to help consumers diversify their investments. A critical difference between the two is that mutual funds are usually actively managed, causing higher fees and commissions compared to passively managed ETFs. They both get managed to optimize the return on some of the assets inside the fund. ETFs and Mutual Funds are great for diversification and rate of returns.

S&P 500 is an ETF, and the average return is about 8-12%. High-performing mutual funds have produced returns of up to 12%.


Retirement savings is the biggest choice and decision of your lifetime. Do you want to work until you’re 130 or do you want to have a plan in place where when the time comes you can drift off into the sunset, doing hobbies, travelling and spending time with your loved ones. I prefer the latter.

This Content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.

Employee Benefit Research Institute. “2020 Retirement Confidence.” Employee Benefit Research Institute, 2020,

Silberstein, Samantha . “Individual Retirement Accounts (IRAs).”, 2022, 11.