Getting Started

Starting down the path to saving for your retirement may be easier than you think: Begin by enrolling in your 401(k), 403(b), or other available workplace savings plan. That's it. You don't have to be a financial guru. It won't take long at all to set up.

Taking that first step to enroll is important for a number of reasons. The earlier you start saving, the more time your money has to grow. That's called compounding, and it can really help you reach your retirement savings goals. See the illustration on the right.

You'll also gain a sense of achievement and maybe even some momentum to take the next step, whether it's getting back on track after an event in your life has slowed your savings, or creating a plan for living out your dreams in retirement.

No matter where you are in life, know that you can take steps toward retirement confidently with the knowledge and tools you'll find from Fidelity.

Simply put, a 401(k) is a type of retirement plan offered through your workplace. If your employer offers a 401(k) plan it makes a lot of sense to participate in it as soon as possible. Here are a few reasons why: 

1. Beyond providing a way to invest for retirement, 401(k)s may offer huge tax advantages. For example, in some plans your contribution comes out of your paycheck before income taxes are deducted, which means your tax bill will be lower. You could also save on taxes when you withdraw the money because you may be in a lower tax bracket in retirement.                                            
2. Another huge advantage: the chance to get "free" money from your employer in the form of matching contributions.                                                                                                              
3. Your retirement plan isn't just a generic or glorified savings plan for your day-­to-­day expenses. It's a long-­term personal plan for growing your savings by investing in a mix of mutual funds, stocks, and bonds.

There's a bit more to it, but that may be all you need to know to get going. If you're interested in learning more, review the documents provided by your employer. They'll include more details about your specific plan.

Of all the factors that influence the size of your nest egg, you control the one that matters most: How much you contribute to it. You can save whatever you like each year, up to the pre-­tax contribution limit set by the IRS. 

Your current income and monthly budget will have a lot to do with how much you can save. But if you're trying to find ways to save more, here are a few things to consider:

• Take advantage of your employer contribution, if your plan offers it. Your employer may match some, or all, of what you contribute, making this one of the fastest ways to boost your balance.
• Automate your savings. Setting up automatic contributions each month and automatically increasing your contributions by 1% or more each year (if your plan allows) are great ways to save, since the money goes directly to your retirement account.
• If you're 50 or older, catch up on your contributions. Saving later in life can still pay off. You may be able to contribute an additional amount each year, depending on the plan you're in.

One final note: If you're a high-­income earner and already reaching the contribution limit, avoid maxing out early. Find out how your employer contributes to your account and spread out your deferral so you don't miss out on employer contributions.