The Merriam-Webster Dictionary defines retirement as, "withdrawal from one's position or occupation or from active working life." For most Americans, however, the definition of retirement is not that straightforward. In fact, a lot has changed since 1875, which was the year the American Express Company established the first private pension plan in the U.S.[1]. Most notably, the average American's lifespan has increased from 49 years in 1900[1] to 79 years in 2015[2]. This is a whopping 61% increase!

With so many people expected to live long after they retire, how do you make sure you are working toward a successful and healthy retirement?

1. Start now

Whether 22 or 52, the best time to start saving for retirement is always the same: right now. There are countless examples of how time increases the value of your money – for an interactive example, visit

Ultimately, the earlier you start saving for retirement, the longer your money has to grow.

2. Set goals and know your retirement needs

Develop the habit of saving now because retirement is expensive. You may need up to 70-90% of your pre-retirement income to maintain your standard of living.

Recognize your time horizon. In 2006, a man who reached the age of 65 could expect to live until age 81; a woman, until 84[1]. This leads to one of the biggest mistakes people make – underestimating their lifespan.

Assuming you make it to age 65, retire and stop working, do you have enough money to survive for an additional 15, 20 or 25 years?

3. Don't forget to factor in the costs of retirement when determining your retirement needs

  • The cost of health care and major medical procedures
  • The cost of inflation (historically 3%)
  • The cost of major expenses such as a second home, graduate school or a dream wedding (for your kids)

4. Contribute to your 401(k)

Does your employer have a 401(k)? If so, use it. The maximum contribution limit for 2015 is $18,000 ($24,000 if you are over age 50)[3].

5. Meet your employers match

Sometimes there is such a thing as a free lunch. Many employers will match 3 – 5% of your annual salary. The only catch…make sure you contribute at least enough to take advantage of the match.

6. Open an IRA

Take advantage of the ability to save even more towards retirement in a Traditional or Roth IRA. The maximum contribution limit for 2015 is $5,500 ($6,500 if you are over age 50)[3].

Opening an IRA can be quick and easy. For an example, see the "Resources" below for a guide from Dave Ramsey.

As a word of caution, there are deduction and income limitations for contributing to IRAs based on your filing status and whether you are covered by a retirement plan at work. Visit the IRS website (the link is provide below) for updated deduction and income limitations.

7. Automate your savings

Technology has made it much easier to invest automatically into retirement accounts. If you contribute to an employer plan, have your contribution automatically deducted from your paycheck each month. If you have an IRA, most investment companies will give you the option to automate contributions each month.

8. Regulate spending

Develop a budget and stick to it. Contributing extra funds early on in your career can make a huge difference in the amount you have when you are ready to retire.

9. Monitor and stick to your retirement plan

Take responsibility for your retirement plan. As you get closer to retirement, you will need to adjust your investment strategy. Retirement, for instance, is not the time to become a day trader or to chase returns.

If you do not want to research investment strategies, maintaining an appropriate portfolio and update your asset allocations yourself, consider hiring a certified financial planner.

10. Learn and ask questions

Learn about your employer's pension plan and understand how it works. Do not be afraid to ask your employer about the options available to you or to find out how much your benefit is worth.

Do you want more information about the tax implications of retirement investing strategies? Reach out to Delap today to continue the conversation.

Additional Resources:

U.S. Department of Labor

Retirement Toolkit



Dave Ramsey - Roth IRA Starter Guide

AICPA - 360 Degrees of Financial Literacy

Delap is one of Oregon’s largest local tax, audit, and consulting accounting firms, located in Lake Oswego, Oregon.