Retirement planning includes several steps you should follow if you want to live comfortably and securely in your golden years. Although you can start planning your retirement at any time, this multistep process should ideally be a lifelong one. This means it’s best to add it to your financial planning from the start. That’s the most effective way to ensure a secure, safe, and enjoyable retirement. 

Planning how you’ll get there may seem boring but it’s definitely essential. If you’re just at the beginning of your retirement planning, that’s good! If you’ve just started to save for retirement, congratulations! You’ve undertaken the most crucial step. Many Americans have little to no retirement savings, so you are already ahead of the rest.

However, if you want to succeed eventually, you’ll need a plan to make sure you’re saving enough and investing wisely. 

To help guide you, we’ve selected some of the most essential retirement planning tips as highlighted by well-known experts in the field (No. 9 seems to be the most forgotten bit of financial advice!).

1. Start Early

This is definitely the most important and vital retirement planning advice. As the US Department of Labor advises, you should start as soon as possible. If you save $6,000 yearly and get a 7% return on your assets, you’ll have about $150,000 after 15 years, according to the DOL.

If you can maintain the same saving rates for another 10 years, you’ll end up with about $820,000. Simply put, by saving for approximately 10 additional years, you can grow a five times larger nest egg.

There are many possible excuses for not saving for your golden years and they all sound fine. You might have a few of your own. However, you know you should start your retirement planning. Here are four strong reasons to start saving for retirement:

• You don’t want to live on just Social Security checks after retirement
• You don’t want to become a financial burden on your children
• You own a tax-deferred account that will help you reduce the money spent on taxes
• Allocating money to the tax-deferred retirement account can result in a happier and more comfortable retirement

2. Make a Plan

Most financial advisors agree that planning your retirement — even if you don’t know what your golden years will look like for you — is a vital first step. Ray Zick, a certified financial planner, and Accredited Investment Fiduciary analyst advises young folks to “set a goal and take some real steps towards it no matter if your goal changes”.

Celeste Byers, also a certified financial planner, fully agrees, “Once you take retirement planning steps ahead, you’re avoiding future stressors in the long run. It empowers you to do something today to help reduce stress in the future because it won’t be any less unpleasant and stressful if you don’t have enough saved for retirement.”

Retirement planning doesn’t just improve your financial wellness, but it can also bring you some peace of mind down the road.

3. Contribute To Your Employer’s Retirement Plan

Another piece of retirement planning advice from the US Department of Labor is backed up by lots of analysts across the country. According to them, the easiest and best way to build a nest egg is by making contributions to your employer’s retirement plan.

To begin with, contributing to a retirement plan will provide tax benefits, ranging from the deferral of your investment gains taxes until they are withdrawn to the deduction you’ll most likely get on your contributions.

You may also be eligible for matching contributions from your employer. Let’s say your employer chooses to offer a 5% match. This means that your employer contributes the same amount to your retirement savings account as you do, up to 5% of your salary. 

4. Save at Least 15% of Your Income

Fidelity investments specialists advise that you should save at least 15% of your income, which is higher than the 10% suggested by many financial consultants. According to Fidelity, the majority of Americans will require their savings to generate approximately 45% of their retirement income.

Based on such data, the investment company concluded that setting aside 15% of your income from 25 to 67 should be sufficient. The earlier you begin saving 15% of your wages or salary, the less stress you’ll feel because your income increases over your professional career.

Those who delay retirement planning until later in life will need to contribute more so that’s another reason to start as soon as possible!

5. Invest in Index Funds

An index fund is a type of investment that monitors a market index, which is often made up of bonds or stock.

Warren Buffett, CEO of Berkshire Hathaway, also known as the “Oracle of Omaha”, has long advised most investors to choose index funds saying this is one of the greatest retirement planning tips out there. He has even directed the executor of his estate to invest 90% of his assets once he dies. And he gives the same piece of advice to those saving for retirement.

“The key isn’t to choose the perfect company, but to basically buy all the big firms through the S&P 500. Make sure you do it regularly and at a very, very low cost,” Buffet advises.

6. Take Calculated Risks

Retirement planning also includes taking calculated risks. Mark Cuban, the famed billionaire, is known for his no-nonsense style when it comes to investing and wealth. One of his fundamental investing concepts is that you must take calculated risks in order to succeed.

During an interview he gave to Money magazine in 2017, Cuban stated that while saving $1 million is achievable, it requires risk-taking and dedication. To put it differently, according to Cuban, to achieve that long-term financial success you’re looking for, you can’t be scared to take risks.

Keep in mind that avoiding risks isn’t always an act of cowardice. Instead, choosing to avoid risks is one of the wisest decisions you can make until you’ve developed the skills required to properly handle risk.

7. Limit Risky Investments to 10%

Taking risks as part of your retirement planning can help you build a nest egg, but this doesn’t mean there’s no limit to how far you should go. According to Cuban, this implies keeping truly risky, speculative investments to no more than 10% of your portfolio.

“For those who are true adventurers willing to throw the Hail Mary, I advise them to take 10% and put that amount in Ethereum or bitcoin. Once they do this, they should pretend they’ve already lost the money,” he told Vanity Fair.

In other words, if you want to boost your retirement returns, do so prudently while limiting your true speculations to a tiny part of your portfolio.

8. Keep Most of Your Retirement Investments in Stocks

Stocks should be a top priority if you’re searching for the sort of “prudent risk” that Mark Cuban recommended to take. According to Larry Fink, CEO and founder of investment firm Blackrock, retirement investors should keep a great part of their portfolios in stocks, matching the advice of other well-known investors such as Warren Buffett.

Following Fink’s suggestion, even 50-year-old investors should have the vast majority of their money in stocks to obtain the long-term returns they go for.

While investing in stocks has been demonstrated to be the best strategy in building your nest egg, this retirement planning approach isn’t without risk. That’s why it’s important to keep at least some money outside of the stock market.

9. Leave Your Emotions at the Door

Fans of the stock market and ’80s movies may recall Gordon Gekko, the “Wall Street” character played by Michael Douglas saying “Don’t get emotional about stock. It clouds the judgment.” Gekko is a fictitious character, but his words are definitely relevant for day-to-day life. Furthermore, the reality of Gekko’s remark is confirmed by some of the world’s most famed investors.

“Many individuals with high IQs are awful investors. They’ve got terrible temperaments and this can definitely ruin your portfolio. You must keep irrational, raw emotion under control,” says Charlie Munger, vice chairman of Berkshire Hathaway owned by Warren Buffett.

If you’re new to retirement planning strategies, you’ll undoubtedly have some emotional outbursts while investing. Just keep in mind that you should stick to your long-term retirement plan and avoid getting carried away by emotion.

10. Automate Your Savings

You may find this surprising, but even the most diligent investors struggle sometimes to constantly add money to their investment accounts in the long term. That’s why automating your savings turns out to be one of the best approaches when it comes to retirement planning.

Nothing will get in your way of making retirement contributions if you “pay yourself first” instead of merely investing money left over at the end of each month.

According to Debra Greenberg, head of Bank of America’s Retirement and Personal Wealth Solutions, making your monthly retirement contributions automatic will allow you to build your nest egg without worrying about it.

You may also enjoy finding out about some other retirement planning tips: 10 Bad Financial Habits That Are DEFINITELY Cracking Your Nest Egg.