by beconrad

With the number of workers covered by traditional defined benefit pension plans falling rapidly, it has never been more important for every worker to start building wealth for a comfortable retirement. The money you accumulate during your working years will be critical to maintaining your lifestyle when you can no longer work. Social Security might still provide some benefits, but for the vast majority of workers Social Security alone will not be enough. Putting money aside consistently, and starting your saving strategy as early as possible, is the best way to provide for a comfortable retirement.

Save Consistently Over a Lifetime

One of the most critical parts of saving for retirement and building wealth is saving consistently from a young age. Even if you can only afford to put away 2% of your paycheck, do it consistently payday after payday. This will instill the kind of fiscal discipline you will need to ramp up your savings and investments later on. Investing consistently over time is perhaps the best way to build wealth for retirement.

This consistent approach to investing serves a number of important goals. As stated earlier, this strategy builds financial discipline. A consistent investment strategy also means that you buy more shares of your favorite mutual fund when the market is down and prices are low, and fewer when the market is running at all time highs. This is known as dollar cost averaging, and it is a very important part of successful investing.

Maximize Your Retirement Plan Contributions

Putting money aside in your company's 401k is a vital wealth building strategy. If you are self-employed or run your own business, a Keogh, SEP-IRA or Solo 401k can serve the same purpose. But no matter what type of retirement vehicle you have available, it is important to contribute as much as you can. If you are starting your first job and making little money, try putting enough aside to get the company match--failing to contribute at least this much is literally like throwing money away.

While contributing enough to your 401k to get the company match is important, it might not be enough to get you to your dream of a comfortable retirement. In order to increase your odds of enjoying the golden years you dream of, put aside 1-2% more each year to accelerate your savings and make your money grow faster. As you make more money over time, direct at least a portion of each raise you receive toward your retirement goals. The good news is that contributing an extra 1-2% to your 401k will not reduce your paycheck by the same amount. The reduction in your take home pay will be less, since the money you contribute to the 401k is not subject to current taxation.

Consider a Target Date Retirement Fund

While target date retirement funds are not right for every investor, they can be a good choice for those who prefer a hands-off approach to retirement planning. During the retirement cycle, it is important for investors to periodically rebalance their portfolios based on their age and number of years to retirement.

A target date retirement fund makes these adjustments for the investor, relieving them of some of the burden and drudgery of retirement planning. When choosing a target date fund it is important to select one whose target matches your expected retirement date. It is also important to choose a fund with low fees and expenses - high fees can really eat into the fund's return over the long term.

By following these simple and straightforward wealth building strategies, you can increase your odds of a comfortable retirement and watch your nest egg grow over time. These days no workers can afford to be blasé about his or her financial future, and the sooner you get started the better off you will be.