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4 Things You Need to Know If You’re Not Saving for Retirement

It’s one thing to help people who are saving for retirement make better decisions — but what about those who aren’t?

Here are four things that those who aren’t (yet) saving for retirement should know.

It’s never too late to start saving for retirement.

Perhaps you think there’s no point at some point — maybe you think you’ll just work longer, or work forever (some surveys suggest people think they can actually do that, but the data suggests otherwise). 

Now, starting late does make it harder to achieve meaningful results. You will have to save more — probably considerably more — than if you start young, and you won’t have as much help from things like the investment markets, or an employer match. But, as they say, better late than never. 

It’s never too early to start saving for retirement.

Retirement is not generally the first thing people save for: that first car, college (yours or your kids), a home. Maybe retirement seems a long ways off, though probably not as far off as you may think.  

But retirement isn’t just about being old and not working, it’s about having enough money set aside so that you can have the freedom to do what you want to do (including not working). Even if what you want to do is what you’re doing now.  

You don’t have to have a retirement plan at work to save for retirement.

Having access to a retirement plan at work makes a big difference in terms of whether people save for retirement or not — and the impact transcends income, gender and age. In fact, data prepared by the nonpartisan Employee Benefit Research Institute (EBRI) shows that over 70% of workers earning from $30,000 to $50,000 participated in employer-sponsored retirement plans when a plan was available, whereas less than 5% of those middle income earners without access to an employer-sponsored plan contributed to an IRA.   

In other words, middle class workers are 15 times more like to save for their families’ retirement at work than on their own.

But you don’t have to have a plan at work to have a plan. You can save for retirement in an individual retirement account (your local bank or brokerage should be able to help), nonworking spouses can now contribute to an IRA, subject to certain income restrictions, and there’s even a Roth IRA nondeductible option. You might even get some help from the federal government via the Saver’s Credit. And you can sign up for automatic deductions from your paycheck, or drafts from your checking account, to make it easier to save regularly.

If you DO have a retirement plan at work, use it.

The primary factor in determining whether or not a middle-income worker is saving for retirement is whether or not they have a retirement plan at work. If you do, you likely have the support of an employer match, the convenience of automatic payroll deduction, and, among other things, access to a menu of investment options that have been screened and reviewed by fiduciaries who are charged to do so with your best interests in mind (see “6 Things 401(k) Participants Need to Know”).

Yes, having access to a retirement plan at work is a big advantage -—but only if you take advantage of it.