Heidi Foster: 7 tips for planning your retirement

Planning financially for retirement might feel overwhelming.

For some, that feeling is what keeps them from implementing a plan. If you have yet to start planning for your retirement -- make today the day you begin.

1. The earlier you begin, the better.

Time is definitely one of your greatest allies. A person who begins contributing a modest amount to a retirement plan in his or her early 20s could end up on par with someone who contributes much more aggressively but does not start until the mid-30s. Even if you have to start small, start. Whatever amount you can afford to set aside for later, do it -- and let it grow.

If you don't have the luxury of starting young, don't waste time worrying about it. Start now. You'll never again be younger than you are today.

2. Be smart about what you'll need.

While it's true the general cost of living might be less for those who have retired, don't forget, there are other costs to consider. Health care costs, for example, might be greater in retirement simply because you're not as healthy as in your youth. Additionally, you'll want to take inflation into account. If you plan your retirement based on the cost of living and income of your 30s, when you hit your retirement years, you might find you underestimated your needs.

3. Be smart about how long you'll need it.

When Social Security was being developed. In the 1930s, a male retiring in the United States was only expected to live a short time in retirement.

However, the average life expectancy for U.S. citizens has risen steadily throughout the past 50 years.

4. Take advantage of tax-deferred contributions.

Sometimes, people determine how much they can afford to contribute to a retirement account based on their net income, rather than their gross income. You might decide you only can afford $100 less per paycheck, net. Nevertheless, remember that many contributions, like those to your 401(k) for example, you make with pre-tax dollars. Thus, you can afford to contribute more from your gross income and only still "miss" $100 from your net income.

5. Take advantage of matching contributions.

If your employer offers a 401(k) match, take the maximum advantage of it. It's a very positive domino effect. The more you contribute, the more you earn in matching contributions (up to the maximum allowable amount).

Think of it this way -- if your employer offers a 50 percent match, then for every $100 you don't contribute, you're missing $50 in "free money." In essence, you're missing part of your pay. You're also missing the growth potential of that money as well.

6. Trim the fat.

Keep track of your spending for one month. At the end of the month, take a careful look at what you spent. Did it all make sense? Was some frivolous? Taking a close look at exactly where your money is going is often the best way to discover areas that need improvement and ways to adjust your spending habits. Add up all the money you feel you spent unnecessarily, then add that amount to your retirement contribution.

7. Get help.

These retirement tips are intended to help you get started toward, potentially, a more successful retirement. However, they're just that -- a starting point. While it's important to educate yourself and understand your finances, seeking the assistance of a financial professional might be one of the best moves you make.

Heidi Foster is a wealth adviser and investment manager with American Wealth Management and can be reached at www.financialhealth.com, 775-332-7000 or Heidi@financialhealth.com. Securities offered through LPL Financial member FINRA/SIPC. Investment advice offered through American Wealth Management, a registered investment adviser and a separate entity from LPL Financial.

These views are those of the author and should not be construed as investment, tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. If assistance or further information is needed, the reader is advised to engage the services of a competent professional.

Editor's Note

This month's Reno Gazette-Journal personal finance series explores employer retirement plans. Each Friday, one of three local experts "" Steven Anderson, first vice president/financial consultant for RBC Wealth Management; Heidi Foster, wealth adviser and investment manager for American Wealth Management; and Raymond Gonzalez, first vice president/investment for Wells Fargo "" will address a facet of how best to manage your retirement investments. Topics for discussion always are welcome. Please e-mail business editor Lauren Gustus at lgustus@rgj.com.