Retirement is one of the most significant financial goals many people have, and achieving a financially secure retirement requires careful planning and smart decision-making. The good news is that it’s never too early (or too late) to start. Whether you’re just beginning your career or approaching retirement, understanding the basics and using available tools can help you build a financially healthy future.

1. Start Saving Early
One of the best ways to ensure a comfortable retirement is to start saving as early as possible. Even small contributions can grow significantly over time due to the power of compound interest. For example, if you save $100 a month starting at age 25, you’ll have much more by age 65 than if you start saving the same amount at 35.

The key to long-term savings growth is consistency. By contributing regularly, you’ll benefit from compounding, where your earnings generate earnings over time. Even if you’re starting later in life, it’s important to save aggressively and take advantage of catch-up contributions (if available) to boost your savings.

2. Maximize Retirement Accounts
Retirement-specific accounts like 401(k)s and IRAs (Individual Retirement Accounts) are among the most effective tools for retirement savings. These accounts offer tax advantages that can significantly boost your savings.

401(k) Plans: Many employers offer 401(k) plans, which allow you to contribute pre-tax dollars from your paycheck. Some employers even match a portion of your contributions, essentially offering free money. Be sure to contribute at least enough to get the full employer match, as this is one of the fastest ways to grow your retirement savings.

IRAs: If your employer doesn’t offer a 401(k) or you want to supplement your retirement savings, consider opening an IRA. You can choose between a Traditional IRA, where contributions are tax-deductible, or a Roth IRA, where withdrawals in retirement are tax-free. Both options offer tax advantages that help your money grow more efficiently.

3. Automate Your Savings
A simple way to ensure you’re consistently saving for retirement is to automate your contributions. By setting up automatic transfers from your checking account or paycheck into your retirement accounts, you eliminate the risk of forgetting to save or spending the money elsewhere.

Automating your savings also removes the temptation to skip contributions during tight financial months. This "set-it-and-forget-it" approach helps you stay disciplined and build your retirement fund steadily over time.

4. Determine Your Retirement Needs
How much do you need to retire comfortably? A common rule of thumb is to aim for about 70% to 80% of your pre-retirement income to maintain your lifestyle in retirement. However, this number can vary depending on your personal circumstances, such as your healthcare needs, desired lifestyle, and how long you expect to live in retirement.

Use online retirement calculators to get an estimate of how much you should be saving. These tools can factor in your current savings, future contributions, expected retirement age, and anticipated expenses to give you a clearer picture of your retirement goals.

5. Diversify Your Investments
To grow your retirement savings, it’s important to invest wisely. Diversifying your investments helps manage risk while maximizing returns. Most retirement accounts offer a range of investment options, including stocks, bonds, and mutual funds.

A diversified portfolio might include a mix of:

• Stocks for long-term growth potential,
• Bonds for income and stability, and
• Mutual funds or ETFs for a balanced approach.

Your investment strategy should reflect your risk tolerance and time horizon. Generally, younger investors can afford to take more risks, while those nearing retirement should prioritize preserving their savings and minimizing volatility.

6. Take Advantage of Catch-Up Contributions
If you’re 50 or older, you’re eligible to make catch-up contributions to your 401(k) or IRA, allowing you to save even more. For 2024, the IRS allows an additional $7,500 in catch-up contributions to 401(k) accounts, and an additional $1,000 to IRAs. This can be a valuable tool for boosting your retirement savings if you started late or need to make up for missed contributions.

7. Monitor and Adjust Your Plan
Regularly reviewing your retirement plan is crucial to ensure you’re on track to meet your goals. As you age, your financial situation and retirement goals may change, requiring adjustments to your savings rate or investment strategy. For example, as you near retirement, you may want to shift your portfolio toward more conservative investments to protect your savings from market downturns. If you have questions about your plan and making adjustments, the Team at Andover Bank can help you make informed decisions.

Retirement planning is a lifelong process that requires consistency, smart decision-making, and regular monitoring. By starting early, maximizing your retirement accounts, and using tools like automatic savings and diversified investments, you can build a secure financial future. Whether you’re just beginning to think about retirement or are well on your way, it’s never too late to take control of your financial future and work toward a comfortable retirement.