This step of your retirement planning process identifies what
mechanisms are available to help ensure your funds are most
efficiently used to meet your financial goals.
There are several ways to save for retirement. Payroll deduction
savings plans or automatic transfers are ideal ways to set aside
funds before they are incorporated into your spending. These
methods provide a systematic and consistent way to set money aside
for your retirement, often before taxes. Take full advantage of
employer matching or savings plans, as well as pretax medical
spending accounts.
If you find you are unable to save enough to meet your goals,
you may need to invest more aggressively than you had originally
considered, or you may need to readjust your goals, or both.
A sound financial retirement plan must satisfy a number of
competing goals. First, you must be sure to set aside enough funds
to meet emergency or liquid contingencies. Once that fund is in
place, you must simultaneously save for your other goals - college
expenses, retirement, housing needs, vacations, etc. - all the
while making sure your investments are properly allocated to
maximize your return within acceptable risk tolerances.