Personal Resource Center

5 Steps to Begin Planning for Retirement

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Tip: Identify small steps you can take that will serve as a road map to help you reach your retirement savings objectives.

One of the keys to retirement saving success is to take retirement saving one small step at a time. Many financial planners say focusing too much on the total amount of money you need to save for retirement can be intimidating and discouraging. Instead, identify small steps you can take that will serve as a road map to help you reach your ultimate retirement savings objectives.

Here are five retirement saving steps to consider:

1. Make saving for retirement a top financial priority.

For many people, this is the first step to retirement saving success — and it may require making some financial sacrifices. For example, you might have to downsize your home, drive less expensive cars, or scale back your annual vacation plans. Think of this as delayed gratification; living a little bit less extravagantly now could enable you to live a more comfortable lifestyle down the road after you retire.

2. Decide which retirement savings vehicles you will use.

There are many different tools you can use to save and invest money for retirement in a tax-advantaged way. For example:

  • Your employer may offer a 401(k) or 403(b) plan, a pension, or a profit-sharing plan. Be sure to contribute at least enough to maximize any matching funds your employer may add to your plan.
  • If you don't have access to an employer-sponsored 401(k) — or if you would like to save more than you can through that plan — you can contribute to a tax-advantaged Individual Retirement Account (IRA). You have the option of setting up a traditional IRA or a Roth IRA — or both. Each comes with its own unique contribution rules, withdrawal rules, and tax advantages.
  • If you own a business or are self-employed, you can establish your own Simplified Employee Pension plan (SEP) or SIMPLE IRA.Contribution limits are higher than with an IRA.
  • Annuities, whole life insurance policies, and nonqualified deferred compensation plans are other tools used by many individuals and families to save money for retirement.

A financial advisor can help you choose the right vehicles for you and your family.

3. Save and invest with discipline.

Often the best way to save for a long-term financial goal like retirement is to have a certain amount of money automatically transferred into your retirement savings account on a regular basis, such as monthly. This strategy, which is known as dollar-cost averaging, makes it easier to be disciplined in your retirement saving and investing efforts.

How much should you save for retirement each month? An advisor can help you determine what you need to save to meet your retirement income goals. With compounding returns, every dollar you save and invest today could be multiplied exponentially by the time you're ready to retire. The most important thing is to establish discipline and stick with it!

4. Determine the right asset allocation.

Asset allocation refers to how the investments in your retirement portfolio are divided between stocks, bonds, cash, and other asset classes. For example, your asset allocation could consist of 60% stocks, 30% bonds, and 10% cash equivalents. Your equities may further be diversified geographically, and by company size or industry. Bonds may be apportioned between long-, medium-, and short-term maturities and according to credit quality.

The right asset allocation for you and your family will depend on such factors as your time horizon (how many years until you plan to retire) and your comfort with taking risk. In general, if you're relatively young and have many years until retirement, you could be more aggressive and allocate more of your assets to riskier classes like stocks. But if you're closer to retirement, you might prefer to allocate more assets to less-risky classes like short-term bonds and cash equivalents to protect against market fluctuations.

5. Rebalance your retirement portfolio as necessary.

Over time, market movements can knock your asset allocation out of balance. This is why it's important to regularly monitor your asset allocation and rebalance your portfolio by buying and selling securities in different asset classes as necessary. You'll want to be mindful of the income tax impact when making these adjustments to your portfolio. A financial advisor can help you with this endeavor.

Break it down into small steps

If you've been putting off saving for retirement because it seems too intimidating, break the process down into these small steps instead of getting hung up on a big number that seems unattainable. When you're ready to get started on what will hopefully be a successful retirement saving journey, Synovus is here to help. Give us a call at 1-888-SYNOVUS (1-888-796-6887) and we'll be happy to connect you with a financial advisor near you.

Important Disclosure Information

This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information. Diversification does not ensure against loss.