Retiring with regrets is the last thing you want to do. Unfortunately, around half of all retirees responding to an Employee Benefit Research Institute were unhappy with their financial affairs in their later years. This group of retirees all said they had saved less than they needed to be financially secure.

That’s a large number of disappointed seniors, especially compared with the 17% who said they had saved more than they needed.

Finding yourself in retirement with too little money is a tough position to be in, as health or family issues may mean you can’t just go back to work to make up for your financial shortfalls. You don’t want to end up wishing you had made different choices — and you don’t have to if you aren’t retired yet.

Just follow these steps to ensure that you can live the retirement life you truly deserve rather than one of sacrifice.

Start saving as early as you can

One of the single best ways to ensure you have the money you need in retirement is to start saving early. Not only does this give you more years to invest money, but it also means you will have more years of compounding to grow your wealth. Compounding happens when returns are reinvested and earn you more money. It’s a really powerful wealth-building tool.

To understand how early investing makes a difference, consider how much you would need to save to end up with a $1 million nest egg by age 65. If you earned a 10% average return, this is the amount you’d need to invest each month depending on the number of years you had to save:

• 10 years: $5,228.77
• 20 years: $1,454.96
• 30 years: $506.60
• 40 years: $188.28

Looking at these numbers, it’s easy to see that becoming a millionaire is doable if you have time on your side — but not necessarily possible if you don’t.

Take full advantage of tax breaks

There are tax breaks to help you save for retirement, and taking advantage of them is going to be important if you don’t want to end up one of the seniors facing regrets about the size of your account balance.

Tax breaks come from investing in a traditional or Roth 401(k) or IRA. If you opt for traditional accounts, your retirement investment reduces your taxable income, which cuts your tax bill. Since contributions reduce the taxes you owe, they don’t reduce take-home income by as much.

Say you are in the 22% tax bracket and make a $5,000 401(k) contribution. By not paying taxes on the $5,000, you can cut your IRS bill by as much as $1,100. Your $5K contribution doesn’t reduce your take-home pay by the full $5K due to this reduction in your taxes. It only reduces the money you bring home by $3,900.

If you have a 401(k) match from your employer, use that account first so you get both tax breaks and extra free money from your company. After earning your match, you may want to choose an IRA for additional retirement funds to have a broader choice of investment options.

Know your retirement goal

Having an understanding of your retirement goal can be helpful as well, so you’ll know what you are working towards and can make sure you are on track. There are different ways to set your target number, but one of the easiest is to assume your nest egg should equal 10 times your final salary. If you expect to earn $100K when you retire, you’d need $1 million invested.

Knowing your big goal lets you set smaller ones. You can use the calculator on Investor.gov to determine how much to invest each month to hit your big goal by your chosen retirement date.

Automate your investments

Finally, if you know how much to invest, make it automatic.

Set up your 401(k) or IRA contributions to come directly out of your pay into your retirement plan. That way, chances are good you won’t forget or fail to make contributions since the low-effort default choice will be to invest for your future.

If you follow these steps, you can reduce the chances of finding yourself among the 50% of retirees who regret not saving more to build the security you need in your later years.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.