CDs. Retirement plans have several advantages that help you save more money than if you just tried to reach your retirement goals with a regular bank account or stock brokerage account. Some of the possible benefits of retirement plans include tax deductions, delayed taxes on your investment earnings, and extra payments from your employer into your plan. In exchange, these plans have limits on when you can take out your money. If you want to take out money before you retire or turn 59 1/2, you could owe extra tax penalties. Why it’s important Saving for retirement is incredibly important. People are living longer than ever, which means longer retirements. At the same time, fewer companies offer guaranteed pensions while the finances behind Social Security are a bit uncertain. For most people to reach their retirement goals, they also need to build their personal savings through retirement accounts. What you should consider As you figure out how much to add to your retirement plan, you need to consider when to retire. The earlier you want to retire, the more you need to save per year to reach your goal. Also consider what kind of lifestyle you’d like in retirement. Do you want to travel and be very active or do you want a simple, inexpensive retirement? If you’re planning on working during retirement, you could get away with saving a little less. You should also consider whether you might need your money before retirement. It’s important to still have an emergency fund outside of your retirement plans so all your money isn’t locked up. 401(k) plans, as extra compensation for their employees. These plans offer the same sort of benefits as IRAs, like delayed taxes on your investment earnings and tax deductions for your contributions. The amount you can contribute per year depends on how your employer set up the plan but often it’s more than the IRA limit. Also, some employers offer matching contributions. They give you extra money when you invest in your work retirement plan. For example, your employer might add 50 cents for every dollar you contribute to your 401(k) plan. Self-employed retirement accounts If you’re self-employed, you can open a SEP IRA or Simple IRA for yourself. These types of retirement plans have the same tax benefits as regular IRAs but you can add more per year into these accounts. However, if you hire employees for your business, you may have to give them money for their retirement accounts whenever you add money to your own account. start saving as soon as you possibly can. The sooner you start saving for retirement, the more time your investments will have to grow. Think of investing like pushing a big boulder. It’s tough at the beginning but once the boulder gets moving, it basically runs itself. For example, if you start saving $3,000 a year when you’re 25 and only save for 10 years until you turn 35, you’ll most likely have more money in retirement than someone who starts saving $3,000 a year at 35 and saves for 30 years. How much should I save for retirement? This depends on your budget but more is better. Saving more gives you more options in the future, while saving too little can get you in trouble. If your employer offers a matching contribution to your 401(k) plan, at a minimum, save until you’ve gotten all this free money. Another good target is to save at least 10 percent of your income each year for retirement. When should I retire? Once again the best retirement age really depends on your own goals. The key is if you save early and often, you can make this decision yourself. Too many people are stuck delaying retirement because they haven’t saved enough. If you want to retire early, you need to save a lot more per year than someone who doesn’t want to retire early or plans to work a little during retirement. Also, if you want to retire really young, keep in mind that you can only take money out of your IRAs when you turn 59 ½ and out of your 401(k) when you turn 55. If you want to retire earlier than this, you should invest some money outside of retirement plans. when you buy stocks, mutual funds or anything else from your broker, you can tell them to put those assets in your IRA. If you want to invest through a work retirement plan like a 401(k), your company needs to offer one. If they do, your HR department should be able to tell you the rules and how to set up deposits from your paycheck into the retirement plan. IRA contribution limits There is no official minimum IRA contribution. However, your broker might have a minimum requirement for transactions. For example, if you want to buy stock, your broker might require that you buy at least $100 worth or it won’t accept the transaction. There are maximum IRA contribution limits. As of 2015, you can invest up to $5,500 a year into an IRA if you are younger than 50 and up to $6,500 if you are 50 or older. Also, if you are single and make more than $131,000 or are married and make more than $193,000 combined, you can’t use the Roth IRA. IRA contribution deadline The contribution deadline for adding money to an IRA is April 15th of the following tax year. For example, if you’re trying to max out your 2014 IRA contributions, you have until April 15th, 2015 to add money. After this deadline, you lose all unused potential contributions. You can’t skip three years of investing and then try to make $16,500 of IRA contributions the following year.