3 Simple Steps to Retire Comfortably

By Chuck SalettaFool.com

Getting to a comfortable retirement can be a remarkably straightforward task. Indeed, just three simple steps form the foundation of that key financial goal. Those steps: Save early, save often, and save more. In large part, everything else is just implementation details.

Is that straightforward? Yes. Is it simple? Yes. Is it easy? Not so much. Life has a way of getting in the way of those steps, but as you'll soon see, reaching that combination isn't as scary or as difficult as you might think. Once you get in the habit and you start seeing the balance in your retirement plans increasing, you'll be incredibly glad you did.

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Step 1: Save early If you can scrape together $500 to start your journey, that money can start working for you as soon as it is invested. The sooner you can come up with that cash, the longer it can work for you, and the larger the amount it can turn into by the time you retire. The chart below shows what that single $500 investment can turn into over the course of your working career, depending on the rate of return you earn and the number of years you let it work for you:

Source: Author's calculations.

No matter how many years you have left in your career, the one thing that's abundantly clear is the fact that the sooner you get started saving, the larger your investment can potentially grow. If you haven't made saving for your retirement a priority before now, there's no better time than this instant to get started.

Step 2: Save often Take that same $500, but instead of a one-time investment, make it a repeated investment, every month. If you take that money directly from your paycheck in the form of a 401(k), 403(b), or TSP contribution (depending on what your employer offers), you can even make it automatic. Between the automatic nature of those direct-from-your-paycheck contributions and the tax benefits you get from investing in those plans, it becomes virtually painless to keep the investments going once you start.

The table below shows what you can end up with by simply repeating that $500 contribution once a month, based on the number of years you can keep it up and the rate of return you receive:

Source: Author's calculations.

If you've got enough time and earn a decent enough rate of return, that simple $500 per month investment can potentially turn into well over $1 million by the time you're ready to retire. Even if you don't get to $1 million or more, check out the difference between what you wind up with by repeatedly investing $500 vs. investing only once.

Step 3: Save more If you're too close to retirement to reach your goal via a $500 per month investment, there's no need to despair. There's no rule that limits you to saving only $500 per month. Indeed, in your 401(k) or other similar employer sponsored plan, you can contribute as much as $18,000 per year -- or $24,000 per year if you're aged 50 or older.

Add another $5,500 per year in your IRA (or $6,500 if you're aged 50 or older), and it's quite possible to get well above that $500 per month level in retirement accounts.

If even that's not enough for you to reach your goal by retirement, you can always invest more in a standard brokerage account and simply earmark the money as going toward your retirement. For most of us, though, it's more a matter of everyday life getting in the way of saving for the future. If you're in that boat, where you'd like to save more than you currently can, you should be aware of and take advantage of opportunities to increase your savings when they arise. Some opportunities include:

Three simple steps -- one comfortable retirement Saving for your retirement doesn't have to be painful, but it does take both time and consistent execution for you to have a solid chance of reaching your goal. By following those three simple steps of saving early, saving often, and saving more, you can get yourself much better financially prepared for the retirement you've been hoping to have. That first step, save early, is critical, and you will never again have any earlier time than right now to get started. So, what are you waiting for? Get started now.

The article 3 Simple Steps to Retire Comfortably originally appeared on Fool.com.

Chuck Saletta has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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