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A Beginner’s Guide to Saving for Retirement

Retirement can sound like one of those giant life goals that lives somewhere between “someday” and “I should really deal with that.” The good news: saving for retirement does not require you to be a finance expert, memorize tax law, or stare lovingly at spreadsheets on weekends. It mostly comes down to starting, staying consistent, and choosing the right accounts for your stage of life. The sooner you begin, the more time your money has to compound.

Why saving for retirement matters

For most people, retirement income comes from a mix of sources: personal savings, workplace retirement accounts, and Social Security. Social Security helps, but it typically replaces only part of what you earned while working, so your own savings usually need to fill the gap. That is why retirement planning is less about finding one perfect account and more about building a system that works month after month, year after year.

When should you start saving for retirement?

The short answer: now.

If you are 22, great. If you are 42, still great. If you are 57 and feeling late, it is still worth doing. Start saving, keep saving, and increase what you save over time if you can. Even small amounts matter, especially when you automate them and give them time to grow.

A simple, beginner-friendly approach:

1. Start with an amount you can afford.

2. Set it to deposit automatically.

3. Increase it whenever you get a raise, bonus, or pay off debt.

How much should you save for retirement?

A practical benchmark many savers use is to work toward saving around 10% to 15% of income over time, but that is a rule of thumb, not a magic number. Your real target depends on your age, expected retirement lifestyle, Social Security benefits, and how much you have already saved.

An approachable starting formula:

• First goal: Contribute enough to get the full employer match in your workplace plan.

• Next goal: Increase your savings rate by 1% each year.

• Long-term goal: Build toward a savings rate that feels meaningful and sustainable.

If 10% sounds impossible right now, start with 1%, 2%, or 3%. A small contribution you actually make beats a perfect contribution you never begin.

The main retirement savings options, explained simply

1) Workplace retirement plans: 401(k), 403(b), and similar accounts

If your employer offers a retirement plan, this is often the best first place to start. Contributions usually come straight out of your paycheck, which makes saving automatic. Depending on the plan, you may be able to choose pre-tax contributions, Roth contributions, or both. Pre-tax contributions lower taxable income now, while Roth contributions are made after tax but can come out tax-free later if rules are met.

Pros

• Easy automatic saving through payroll

• May include an employer match, which is essentially free money if you contribute enough

• Can offer tax advantages

• Often includes simple investment options like target-date funds

Cons

• Investment choices may be limited

• Fees vary by plan

• Early withdrawals can trigger taxes and penalties

• It can be confusing to choose between pre-tax and Roth options at first

Best for

Almost everyone with access to one, especially if there is a match.

If you want help figuring out how your workplace plan fits into a broader retirement strategy, First New York Retirement & Investment Services offers portfolio management and retirement strategy guidance to help you understand your saving strategy and chart the right course.

2) Traditional IRA

A Traditional IRA is an individual retirement account you open yourself. It offers tax advantages for retirement saving. Contributions may be tax-deductible depending on your income and whether you have a workplace plan, and the money generally grows tax-deferred until retirement. Withdrawals from a traditional IRA are generally taxable, and required minimum distributions (withdrawals) apply later in life.

Pros

• Tax advantages

• Good option if you want more control than a workplace plan offers

• Useful for rolling over old retirement accounts

• Can complement a 401(k), rather than replace it

Cons

• Withdrawals are generally taxed in retirement

• Early withdrawals may trigger an additional 10% tax unless an exception applies

• Required minimum distributions apply starting later in retirement

Best for

People who want another tax-advantaged place to save, especially if they have already started with their workplace plan.

3) Roth IRA

A Roth IRA is another individual retirement account, but it is taxed differently. Contributions are made with after-tax dollars, so you do not get a tax deduction up front. In exchange, qualified withdrawals can be tax-free, and you can leave money in a Roth IRA as long as you live. Roth IRA eligibility can depend on income, so it is smart to check the IRS rules for the year you contribute.

Pros

• Qualified withdrawals can be tax-free

• No required minimum distributions while the original owner is alive

• Can be attractive for younger savers who expect to be in a higher tax bracket later

Cons

• No up-front tax deduction

• Income limits can affect eligibility

• You still need to choose investments inside the account

Best for

Younger savers, people who want tax-free income later, and anyone who likes the flexibility of no lifetime required minimum distributions on the account.

If you are not sure whether a Traditional or Roth IRA makes more sense, First New York Retirement & Investment Services offers one-on-one planning that starts with your goals, time horizon, and risk tolerance to discover what fits you best.

4) Share Certificates and IRA Certificates

If you prefer something more predictable, a share certificate can play a role in retirement saving. With a share certificate, you agree to leave money deposited for a set term, and in return you earn dividends at a fixed rate. These can be especially useful for conservative savers or for money you expect to need sooner in retirement. First New York has Share Certificates and IRAs offering competitive dividend rates with terms from 3 months to 5 years.

Pros

• Predictable returns

• Lower volatility than stock-based investments

• Helpful for short- to medium-term portions of a retirement plan

• Good for people who value stability

Cons

• Lower growth potential than diversified stock investments over long periods

• Money is less flexible during the term

• Early withdrawal penalties may apply

Best for

Conservative savers, people nearing retirement, or anyone building a safer bucket of money alongside long-term investments.

5) Savings accounts and money market accounts

A regular savings account is not usually where the bulk of long-term retirement money should live if retirement is decades away, but it is still important. Why? Because retirement plans work better when you also have cash for emergencies. If every surprise car repair forces you to raid retirement savings, the system falls apart.

Pros

• Safe place for emergency savings

• Easy access to cash

• Useful for short-term goals or retirement income you may need soon

• Can help you avoid tapping long-term investments too early

Cons

• Lower long-term growth than diversified investments

• Best used as a support tool, not your entire retirement strategy

Best for

Emergency funds, near-term needs, and conservative cash reserves.

First New York offers a variety of Share and Money Market Savings accounts, giving you the ability to earn more as you save with dividends and no monthly service charges.

6) A taxable brokerage account

A regular brokerage account can be useful after you are already using tax-advantaged retirement accounts or if you want extra flexibility. Unlike retirement accounts, it does not come with the same retirement-specific tax benefits, but it does let you invest for long-term growth without retirement contribution rules. Brokerage accounts can also come with account and transaction fees, so it is important to understand costs.

Pros

• Flexible access to money

• No retirement-age rules for withdrawals

• Good for saving beyond dedicated retirement accounts

Cons

• Fewer tax advantages for retirement

• Fees and trading costs may apply

• Easy to misuse for short-term speculation instead of long-term investing

Best for

People who have already built a strong foundation in workplace plans and IRAs and want another place to invest.

How to invest the money once it is in the account

This is where many beginners freeze. They open the account, fund it, and then the money sits stagnant.

In many retirement accounts, you still need to choose investments. A common beginner option is a target-date fund, which typically holds a mix of stocks and bonds and becomes more conservative as you approach the target retirement year. Target-date funds are often used in 401(k) plans and are designed to shift over time, but they are not a guarantee that you will have enough income in retirement.

More broadly, the SEC explains that asset allocation changes over your life based on time horizon and risk tolerance, and diversification helps reduce risk by spreading money across different investments.

How to adjust your retirement savings as you get older

In your 20s and 30s

• Use your employer plan if available

• Focus on growth-oriented investing

• Automate everything you can

In your 40s

• Increase your savings rate if possible

• Review whether your investments still match your goals

• Make sure old retirement accounts are not scattered everywhere

• Rebalance occasionally if your portfolio has drifted

In your 50s

• Get more intentional about retirement timing

• Use catch-up contributions if you are eligible; the IRS notes these can begin at age 50

• Start thinking about how much of your portfolio should stay growth-oriented versus more conservative

In your 60s and beyond

• Focus on retirement income planning, not just account balances

• Avoid unnecessary early withdrawals before retirement if possible

• Think about how much cash or stable savings you want available for the first years of retirement

• Review withdrawal rules and required minimum distributions for applicable accounts

Final takeaway

The best retirement plan is usually not the most complicated one. It is the one you can actually stick with.

Start early if you can. Start late if you must. Use the account types that fit your tax situation and goals. Keep some cash safe, invest long-term money for growth, and get help when decisions start feeling fuzzy. Our First New York Retirement and Investment Services is ready to be your partner on this financial journey. Over time, steady choices can add up to something powerful: options, flexibility, and a retirement that feels a lot more secure.

*This article is for general educational purposes and is not tax, legal, or individualized investment advice. For personal guidance, consult a qualified financial, tax, or legal professional.