​​How to Save for Retirement: Four Simple Tips

Sandy Guidicianne, Director, First Republic Private Wealth Management
January 26, 2022

  • Retirement is on the minds of nearly every employee, even though few American workers feel confident in their ability to retire comfortably. The Employee Benefit Research Institute’s 2021 Retirement Confidence Survey indicates that only one-third of those polled feel “very confident” in their ability to afford a comfortable retirement; only half of the respondents had even tried to calculate how much savings they'll need to get them through retirement.

Saving for retirement doesn’t have to feel daunting, however. It may feel nerve-wracking to explore your long-term savings, finances and needs for retirement, but it's better to get started as soon as possible. Even if you’re close to retirement age and aren't sure if you've stored away enough money, tactics and support services are available to help you develop a strategy.

Here are four simple steps to help you determine how much you need to save, maximize your retirement savings accounts and make your retirement goals a priority at any age. Each of these tips can help you reduce retirement-related anxiety and prepare you for life after your career.

1. Determine how much you need to save for retirement

It’s difficult for most people to pinpoint exactly how much money they’ll need in retirement, which may make it difficult to know where to get started with your savings plan. The good news is that you don’t need a specific figure to work toward your retirement goals. A ballpark figure is enough in most cases. Retirement experts call this the 80% rule of retirement savings.

80% Retirement Rule
The 80% retirement rule states that most people will need about 80% of their pre-retirement income saved up by the time they leave their job. For example, if your pre-retirement expenses are $50,000 a year, you’ll want to save up $40,000 to go toward your post-retirement expenses. 

The 80% rule isn’t one-size-fits-all, however. You may have different retirement goals that you need to include in your financial plan, such as the ability to travel, to upgrade your lifestyle or to relocate to a place with a higher cost of living than you have currently. These and other considerations may make it necessary for you to budget for more retirement savings.

Once you know how much money you need by your retirement date, you can turn your attention toward growing your nest egg by the right amount and how to get started as quickly as possible. 

2. Start now and don’t stop

The best time to start saving for retirement was yesterday, but the second-best time is today. Time is truly of the essence when it comes to retirement savings. The earlier you start, the more likely it is that you’ll benefit from compounding interest as your money grows via interest. Even if you can only start with a small amount of money, every little bit counts. 

Getting started with retirement savings can be easy, too. Retirement accounts often come with auto deposit features that allow you to allocate a certain amount of money per paycheck to go toward your account. That’s just one way to help keep you on track, though. 

Getting started with saving for retirement often brings tax benefits, as well as encourages you to stick to a savings plan. Several types of retirement accounts allow you to make pre-tax contributions, thus lowering your current taxable income in the process. This means you’re able to stretch your dollar further and lower your tax burden at the same time.

3. Make use of retirement savings accounts 

Familiarize yourself with the several kinds of retirement savings accounts available. Employers might offer common plans, such as a 401(k) (or 403(b) for certain public or nonprofit employers), or others depending on your individual place of employment. Employer plans typically allow you to make contributions from pre-tax dollars directly from your paycheck. Your employer may even make matching contributions up to a certain percentage of what you contribute per check. This can help increase your retirement investment, especially if you meet the maximum matching amount. 

You may not retain your employer match if you leave the company before their matching contributions are fully vested, however, as some employers require their employees to stay with the company for a certain period of time before they’re eligible to keep the matching funds.

You can also open a tax-advantaged individual retirement account (IRA).

There are several kinds of IRAs, with Roth and traditional IRAs being the most common.  You also have more flexibility with how you invest your IRA dollars than you do with a 401(k), which may be limited to one or a handful of preselected investments. There are several kinds of IRAs, with Roth IRAs and traditional IRAs being the most common.  

Here are the pros and cons of common retirement accounts.

Traditional 401(k)

Eligibility Benefits Drawbacks Tax Implications

Available to all eligible employees (as defined by the employer)

Employer matching contributions

Yearly maximum contribution in 2023 is $22,500 (or $30,000 if you're 50 or older)

You have to pay income tax when you withdraw from your account


Contributions are pre-tax

You have to make required minimum distributions (RMDs) beginning at age 72

Early withdrawals may come with penalties, depending on the circumstances

Traditional 403(b)

Eligibility Benefits Drawbacks Tax Implications

Available to all eligible employees of government, school or nonprofit enterprises

Employer matching contributions

Yearly maximum contribution in 2023 is $22,500 (or $30,000 if you're 50 or older)

You have to pay income tax when you withdraw from your account


Contributions are pre-tax

You have to make required minimum distributions (RMDs) beginning at age 72

Early withdrawals may come with penalties, depending on the circumstances



Only available through certain qualifying employers


Traditional IRA

Eligibility Benefits Drawbacks Tax Implications

 Anyone with earned income under age 70.5

You make pre-tax contributions and the investments in the account grow tax-deferred Yearly maximum contribution in 2023 is $6,500 (or $7,500 if you're age 50 or older) You have to pay income tax when you withdraw from your account
    You may not be able to deduct your traditional IRA contribution depending on your income and access to an employer-sponsored plan. Early withdrawals may come with penalties, depending on the circumstances

Roth IRA

Eligibility Benefits Drawbacks Tax Implications

Anyone with earned income whose individual or married filing jointly income is below a certain modified adjusted gross income (MAGI), which changes periodically

Contributions are made from taxable income, meaning you do not pay tax upon withdrawal

You might be in a lower tax bracket in retirement, thus prohibiting you from paying less in tax on your distribution

Since you have already paid income tax on contributions, you can withdraw your contribution without additional taxes being taken out.


You may be able to withdraw money without a penalty   You can also withdraw the growth tax-free once holding periods are met.

You might want to use more than one type of retirement account in order to take advantage of the different benefits provided by each. Plus, your employer may have different rules and policies around their matching contributions, so be sure to check with them when you’re assessing your options. 

4. Intentionally adjust retirement plan priorities as you age

Your retirement investment priorities will — and should — change as you get older and closer to retirement age. Be sure to adjust your strategy over time, so you can adapt to different risk levels and age-appropriate strategies over time. 

Here are a few general guidelines for each decade of your retirement-savings efforts. Each life stage brings with it different challenges and goals, but so too do they have their own potential benefits to your overall retirement planning. 

Saving for retirement in your 20s

From starting a career to monthly student loan payments, your early 20s may mean balancing debts and setting a solid foundation for your future. It’s critical to begin thinking about retirement savings now, even if retirement feels far away. Even a modest amount of retirement savings in your 20s can help you take advantage of compounding interest, which means your retirement savings will grow faster if you invest sooner. Early investing strategies can also differ from those in your 30s and beyond, such as higher risk tolerance.

Saving for retirement in your 30s

From starting a family to buying a house, your lifestyle choices and financial responsibilities in your 30s might change your approach to retirement versus that of your 20s. Your portfolio in your 30s might become slightly more conservative as you establish a family or make major purchases, but will still likely seek to maximize returns since retirement is still several decades away. 

Saving for retirement in your 40s

Your 40s are likely to be marked by increased family costs, such as educational needs for your children and care for your elderly parents. You may also want to enhance your lifestyle around this time, which all has to exist alongside the need to stay on track for retirement. This means balancing life’s big and small expenses with your own need for a solid, growing nest egg.

Some may only begin to think about retirement investing at this period of their life as well, which poses its own unique challenges. If you’re only getting started with your retirement savings, know that there are still options to make the most of your money. Financial professionals can help you determine the best strategy to help you make up for lost time.

Saving for retirement in your 50s and beyond

By your 50s, you’re likely to be in the home stretch toward retirement. If you began saving for retirement early, you should hopefully be close to your goals by this point—or at least on track to reach them. That being said, life rarely goes according to plan, which might mean you’re in a position where catch-up contributions are a necessity. 

The good news is that the IRS has different rules for people in this life stage in terms of maximum contributions and catch-up contributions. These make it easier for you to bridge the gap between where your retirement savings are and where you want them to be.

Lifestyle Changes and Retirement Savings
Life happens: divorce, job loss or employer financial hardship can happen at any time. It’s never too late to adjust your retirement savings plan, however.

What’s the best way to save for retirement?

The best way to save for retirement is unique to your age, financial realities and goals, lifestyle and dreams for the future. Retirement looks different for everyone and happens at different times and under different circumstances. There are a few universal tips to help you get and stay on the right track for the conventional retirement path, of course, but your own journey is bound to be unique to you. 

The strategies mentioned in this article may have tax and legal consequences; therefore, you should consult your own attorneys and/or tax advisors to understand the tax and legal consequences of any strategies mentioned in this document. This information is governed by our Terms and Conditions of Use.