I was raised in a family where both parents were college educated but never discussed topics such as savings, retirement and budgeting with us kids. My retirement knowledge has been obtained through baptism by fire or trial and error. Spending my entire career in banking, I had the privilege to learn from my experiences, especially through colleagues, seminars and customers. It sounds obtuse, but I needed to figure out this life lesson on my own. I was driven to understand the biggest wealth building tool… income.  Here’s what I have learned: These are six ways to plan for retirement at different stages of life.

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#1: No matter how large or small your household income is, you should give every dollar a purpose. Making a monthly budget and sticking to it is essential. You’ll make sacrifices on vacations, eating out, new clothes and even the morning drive thru cup of coffee because every dollar adds up.  

Lisa Davey is vice president and Northeast Arizona retail division manager for WaFd Bank & Arizona Wholesale.

#2: Starting small, making choices and giving yourself grace if you blow your budget is necessary for continued success in building retirement savings. Some helpful tips include: 

  • Shop around for better rates on home and car insurance
  • Cancel subscriptions and memberships that you rarely use
  • Reduce how frequently you eat out and learn to cook at home

#3: Investing 15% of your household income into retirement, after all your debt is paid off, and having three to six months worth of expenses in a separate savings account will make the biggest difference in the long run. If you don’t have all your debt paid off, pause on the 15% of retirement saving and maintain the employer contribution match. After your debt is paid off, you can reinstate your 15% retirement savings. Look for ways to subsidize your income until you’re debt free. 

#4: Your investments need time to grow, so the earlier you start saving, the better prepared and comfortable you’ll be in retirement. Stay away from the get rich quick investments when you plan for retirement. If it seems too good to be true, it’s likely very risky. Stick with investments and strategies with the help of a trusted expert. Have a solid plan in place for life’s journey. For example, investing an average of $800 a month from age 45 to 65 could end up with $700,000 in extra savings. Time and compound interest will work in your favor.

#5: Be prepared for life! Hold yourself, spouse and/or significant other accountable. Working together and being on the same page with money will result in a win. Deciding on how the money will be invested, donated or spent can be rewarding when you’re on the same page. Being able to give back because you’re debt free and financially sound for life’s journey is an amazing feeling. 

#6: Do your homework on investment vehicles. There is a vast amount of information to learn about IRA’s, Roth’s, Mutual Funds, Annuities, Stocks, REITs and 401(k)’s—to name a few. Start now, gain the knowledge and implement the plan without setting yourself up for failure. Go slow in the beginning until you truly understand your financial future.

If you are 40 years old and earn a modest salary of $55,000 and have no retirement, experts suggest saving 15% of your gross income of retirement. This would equate to $688 each month into your 401(k) plan or other retirement vehicle. If you sustained this for 25 years, you could save $1 million by 65. But what if you’re 45 or older? Here’s where you can take advantage of your age. People ages 45 to 54 are hitting their peak earning years, with the typical household income hovering around $97,000 per year. If you invest 15% of that, you’ll be putting away $14,550 a year for retirement! 

All in all, it’s never too late to start retirement savings as there are many ways to catch up, and these six financial tips will be extremely helpful to follow. Time is of the essence and it’s important to start early and be educated on the best ways to save for the future. Having budgeting goals and being on top of your finances will make a huge difference in the long run and allow you to grow both financially and personally. 

Author: Lisa Davey is vice president and Northeast Arizona retail division manager for WaFd Bank & Arizona Wholesale. Founded in 1917, WaFd Bank has over 200 branches in eight western states and is headquartered in Seattle, Washington. WaFd Bank offers a full spectrum of banking services including checking and savings accounts, credit cards, mobile and online banking, real estate financing, retirement plans and loans. To learn more about WaFd Bank, please visit www.wafdbank.com