Consumer Financial Education: Savings & Planning for Retirement

Saving a portion of your hard-earned money, both for an unforeseen financial emergency or for retirement, is critical to your long-term financial health. But before you start putting money aside, you should identify your personal goals, and make a plan for how to save and invest to reach those goals. While a lot of financial advice revolves around very specific formulas and strategies, it can also be helpful to take a step back and look at the big picture. Here are six basic tips to help saving and investing for retirement a little easier:

  1. Understand your options when it comes to short- and long-term savings accounts and retirement investing.
  2. Start saving for retirement early, so your money has more time to grow.
  3. Build up an emergency fund that you can fall back on in case of unforeseen circumstances.
  4. Calculate your net worth on a regular basis to see if you’re on track for retirement.
  5. Pay attention to investment fees since they can significantly erode your retirement funds.
  6. Work with a licensed financial professional if you need help or advice.


Saving money is a smart step in any financial journey; And are a lot of reasons to save, including for emergencies, for an education for yourself or your kids, or to buy a home or a car. Below are a few tips and resources that may help take some of the guesswork out of setting aside some of your income for later.

Emergency Fund:

An emergency fund is a cash reserve that’s specifically set aside for unplanned expenses or financial emergencies. Some common examples include car repairs, home repairs, medical bills, or a loss of income. Taking a vacation or putting in a pool should not be considered an emergency. How much to save depends on your personal situation, but a common rule of thumb is between one and six months worth of expenses, according to your budget.

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Saving for College:

Setting aside money specifically for the education or the education of your child/grandchild can be a great way to reduce the burden of paying for that education when the time comes. There are a number of college savings methods, including a standard savings account, using eligible savings bonds, a 529 plan, or investing in the stock market through an IRA. Like with any saving or investing, its best to start early. Below are a few resources to educate you on the available options.

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Retirement & Investing

For most people, a retirement savings plan, which you build over time during your working years, is an essential part of securing your lifestyle and well-being in retirement. Starting can be overwhelming, but the key is to start. Once you decide to begin, you should create a plan, gauge your risk-tolerance, and work with a licensed professional if you need help or advice. Below are a few additional resources to help you learn what you can do, while employed and once retired, to make the most of your investments.

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Individual Retirement Accounts (IRAs)

An IRA may provide tax advantages for retirement savings. You can contribute each year up to the maximum amount allowed by the Internal Revenue Service, and pay some taxes up front or defer them, depending on the type of IRA you choose.

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401(k) Plans

Typically employer-sponsored, 401(k) retirement savings plans give employees a choice of investment options, typically mutual funds. Employees who participate in a traditional 401(k) plan have a portion of their pre-tax salary invested directly in the option or options they choose. These contributions and any earnings from the 401(k) investments are not taxed until they are withdrawn.

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Social Security Benefits

Social Security provides you with a source of income when you retire or if you can’t work due to a disability. It can also support your legal dependents (spouse, children, or parents) with benefits in the event of your death. Social Security is a program run by the federal government, which works by using taxes paid into a trust fund to provide benefits to people who are eligible.

While you work, you pay Social Security taxes. This tax money goes into a trust fund that pays benefits to:

  • Those who are currently retired
  • To people with disabilities
  • To the surviving spouses and children of workers who have died

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Financial Planners and Investment Advisors

A financial planner is generally someone who prepares financial plans for their clients. The kinds of services financial planners offer can vary widely. Some financial planners assess every aspect of your financial life—including saving, investments, insurance, taxes, retirement, and estate planning—and help you develop a detailed strategy or financial plan for meeting all your financial goals. Others financial professionals call themselves financial planners, but they may offer a more limited list of services. Still other financial professionals provide services to help individuals manage their investments—some of these professionals are registered investment advisers. It’s important to ensure that your financial planner is properly licensed to perform the services you are hiring them for.

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The content on this page provides general consumer information. It is not legal advice or regulatory guidance. The DFPI updates this information periodically. This information may include links or references to third-party resources or content. We do not endorse the third-party or guarantee the accuracy of this third-party information. There may be additional resources that also serve your needs.

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Last updated: Jun 1, 2022 @ 9:29 am