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6 Simple Ways to Build Your Retirement Nest Egg

If you want to retire, you are going to need a nest egg. While it’s the dream of many, the fact is most people don’t have enough retirement savings or aren’t taking the right steps to make sure they will be ready for retirement. Here are six simple ways you can build a retirement nest egg so you can have the lifestyle you want when you retire.

1. Set Goals

We all dream about a comfortable retirement, but it takes action to turn that dream into a legitimate goal. Effective goals are detailed and are based on action. These three questions lay the groundwork to change your dreams of retiring into a concrete (and achievable) goal. 

  1. What are your retirement needs? 
  2. How are you going to act now to meet those future needs?
  3. When do you want to retire? 

By asking yourself these questions, you can start to establish goals for your retirement.

2. Start Early

When is the best time to start saving? The honest answer is today. 

The key to saving for retirement is to invest in a retirement fund (like a 401(k)—more on this later) that earns interest over time. And not only does the money you invest in the fund earn interest over time, but the interest itself starts to earn interest. This is why starting early is so powerful, and it’s called compounding interest.


Ken Fisher of Fisher Investments says, “Many people are too short-sighted and don’t think long-term—only thinking about next month, next week, or tomorrow.” Saving for retirement is all about the long game.

3. Get Out of Debt

When you are in debt, your paycheck is eaten up by bills. Freeing yourself from debt eliminates those monthly bills, allowing you to put more money toward retirement savings. And as a bonus, you won’t be paying the often astronomical interest fees associated with credit cards and personal loans. 

One way to get rid of debt is to target outstanding balances in order of size. As you go, pay the minimum monthly payment for all of your debts except the one with the smallest remaining balance, regardless of the interest rate. Go after the smallest balance with everything you got, putting all the extra income you can spare toward paying it off.

Once the smallest debt is paid off, take the money you were spending toward that bill and divert it to your next smallest debt. Once that debt is repaid, target the next smallest debt. And so forth. As you pay off each debt, you will have more money freed up to pay off the next one. This method is sometimes called the “debt snowball” since it gathers momentum as you go, not unlike a snowball rolling downhill.

Different strategies work well for different people, so if this process doesn’t sound right for you, find one that does. But if you want a nest egg for retirement, you must eliminate debt

4. Contribute to a 401(k)

A 401(k) account is an employer-sponsored account specifically designed for retirement savings. Many companies even provide a contribution match program in which they will match any amount you invest, up to a specific dollar limit or percentage of your paycheck. 

The contribution match program alone is a must-have for investment because it instantly provides a return on your principal. If you are not using the match program at your work, you are missing out on free money.

The money that is set aside in a traditional 401(k) account is only taxed when you withdraw funds. This gives you the incentive to save longer, which will also help the interest of your savings grow over time. If you do withdraw money before you are 60, you will have to pay up to an additional 10% tax. 

5. Invest

Once you are debt-free and have invested in your 401(k), the rest of your savings should not sit in a bank account. While banks are generally safe places for your money, you can earn more interest in other places. Options include investing in: 

  • A certificate of deposit (CD)
  • Mutual funds
  • Bonds
  • Stocks
  • Real estate
  • Precious metals
  • Exchange-traded funds (ETF)
  • Hedge funds 

Each market and investment has its own potential for earnings as well as risk. The best strategy for most people is to diversify your portfolio. This helps protect against the potential loss of your investment.

6. Don’t Deplete Your Account Early

It can be tempting to pull money from your savings, especially when emergencies arise. But you are only hurting yourself by using your retirement before it is needed. 

The best way to prevent yourself from accessing your retirement savings before retirement is to have an emergency fund. Think of your emergency fund as an insurance policy for your retirement. Experts generally recommend setting aside enough money to cover 3 to 6 months of expenses. That way, you can easily access this fund in times of emergency, and your retirement savings can continue to earn compounding interest.

So what about you? What are you doing now to save for retirement? Comment below to share with us what you’re doing to save, or share any questions you might have about retirement. 

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