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6 Simple Steps to Improve Your Retirement Strategy

Rachel Hartman

It can be tough to imagine retirement when it's far in the future. But the decisions you make now about saving and investing will impact the retirement lifestyle you get to live. To simplify the process, try spending a small amount of time, such as an hour or two, working on your retirement plan. You'll find small changes often make a big difference later, when you're ready to step into the next phase of life. Follow these steps to improve your retirement strategy.

1. Look at your 401(k) plan. If your employer offers a 401(k) plan but you're not sure how much to contribute, take a few minutes to find out. Examine what you have contributed so far this year, and think about how much you'll be putting in during the months ahead. "Making sure that you're maximizing your contribution to your 401(k) plan at work is one simple way to boost your financial strategy for retirement," says Nicholas Camp, president of NRC Wealth Strategies in Cranberry Township, Pennsylvania. If you are 50 or older, you can contribute up to $24,500 to a 401(k) plan in 2018. If you're younger than 50, the maximum deposit is $18,500.

Also ask about your company's matching policy. If you're unable to put in the maximum contribution each year, aim for putting in enough to benefit from the 401(k) match. Say your workplace offers to match 50 percent of your contributions, up to 5 percent of your salary. If you earn $50,000 and contribute 5 percent, which would be $2,500, your employer will add $1,250 to that.

[See: How to Max Out Your 401(k) in 2018.]

2. Analyze your cash flow. If you don't have a list of expenses or a budget for each month, set aside an hour to evaluate how you're spending your income. "Tracking your expenses is a critical factor in maximizing your savings for retirement," says Amin Dabit, director of advisory services for Personal Capital. For a quick start, look at how cash came in and went out of your accounts the previous month. "When you can see all of the moving parts of your financial life, it helps you be more mindful of areas where you might be leaving retirement savings on the table," Dabit says.

3. Wipe out debts. Making payments on a car loan or credit card debt can use up valuable dollars that could otherwise be invested toward the future. "Your biggest wealth-building tool is your income, and one way to prevent your income from helping you grow your retirement is when you are making debt payments," says Kalen Omo, a personal financial coach in Tucson, Arizona. To free up money, look for ways to pay down debt at a faster rate. You might find you can switch to a cheaper car and get rid of lingering car payments. Or you may decide to put a weekend getaway on hold to pay off a credit card bill.

4. Check out a retirement calculator. In just 10 minutes or less, you can learn what your Social Security checks will look like. "If you are approaching retirement, be sure you know when you want to turn on your Social Security income," Camp says. You can get a rough estimate of what you can expect at different ages by using an online calculator, such as Bankrate's Social Security Calculator or the Social Security Quick Calculator. Other online calculators will help you understand where you stand when it comes to retirement savings and help you set future goals. A few to try: the T. Rowe Price Retirement Income Calculator the TIAA Retirement Advisor and The Fidelity Retirement Score.

[Read: 6 Social Security Calculators That Can Help You Decide When to Claim.]

5. Set lifestyle goals. Sit down with your spouse and talk about what you want your retirement to look like. Consider what city you want to live in, what type of home you plan to retire in, what trips you want to take and any hobbies you want to pursue. By talking it through with your spouse, you'll be able to identify what's most important to both of you. "Create a list of goals for your retirement," says Adam Pawloski, financial life advisor with Telemus. "Having a better idea of what your objectives are in retirement will help to pinpoint your financial needs."

Once you know what you want to do, take steps to determine what you'll need to carry it out. "Identify what you have in retirement today, and start to project forward to how much money it would take to live that dream," Omo says. Think about what you would need each month to support your lifestyle. Consider setting up a time to meet with a financial advisor. To the meeting, bring the list of goals and your estimates of what you'll need. These can serve as a starting point for your conversation and retirement planning steps.

[See: 9 Easy Ways to Save $500 More Per Year for Retirement.]

6. Make it automatic. If you're contributing to a retirement account sporadically or at the end of the month after you've paid bills, consider streamlining the steps. Think about how much you want to save each month, and then have that amount automatically transferred to your retirement account. "This makes the process easy and convenient," says David Hryck, a tax lawyer and partner at Reed Smith in New York. "You also will be buying into funds on a consistent basis to capture the ups and downs of the market."



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