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Jane King knows about gardening and about planning for retirement. She built a long and successful career as a consumer advocate.  Just before she retired she spent about a year studying to become a Master Gardener, taking classes and reading books about how to create a beautiful landscape.  She says that thinking about gardening can help you understand investing.  “A beautiful garden and a secure retirement don’t magically appear.  Both require careful planning and nurturing to make things grow.”

Map it Out 

Planning is the foundation for both successful gardening and investing.  Each season, Jane maps out what she is going to plant and where each flower should go.  As Jane approached retirement, she knew she needed to think long range, just as when she plans her garden she’s looking ahead to the next few years. And as she has tools she uses in her garden, she recommends that you use a retirement calculator  to figure out what you need to do to make sure your retirement will be what you want it to be. 

Recent research suggests that most people don’t know how much they need to save for retirement.  The Employee Benefit Research Institute’s 2007 Retirement Confidence Study found that only 43% of workers have actually tried to calculate how much they need to save for a secure retirement.  And according to Jean Setzfand, Director of AARP’s Financial Security team, “AARP studies show that people who use our calculator are much more likely to save for retirement.” 

Saving for Retirement Doesn’t Have to be Complicated

Jane knows that she has to plant her tulip bulbs in the fall if she expects to have a rich color display in the spring. Taking small steps now to prepare now for success in the future works with retirement planning, too. “With the forceful power of compounding, putting some money in your 401(k) now is like planting seeds that some seasons later grow into lovely shade trees,” says Jane.

Here are some tips to jump start your retirement saving:

• Power of Compounding. It’s good to start as soon as possible by signing up with your employer’s 401(k) plan. Even small contributions can make a big difference. If you and your husband each saved $10 a day starting at age 52 and invested it in mutual funds that gave you an average rate of return of 8 percent—not unreasonable if you diversify your portfolio and invest for the long term—then by age 70 you’ll have $294,449 in savings. If your employers match 50 percent of your contributions, your nest egg could grow to $441,673.
• Future Income.  When you put money into a 401(k) you are making sure that some of your salary today will be available when you need after you retire. Instead of that money coming home in your paycheck, it goes directly into your retirement account. You just postpone when you will receive a portion of your salary.
• Tax Benefits.  Contributions save on taxes, too. For example, assume that $100 goes into your account. The full $100 goes to work for you. But if you didn't contribute the money and kept it as "take-home pay," and you are in the 15% tax bracket, you would only see $85 of it after taxes.
• Employer Match.  Take advantage of your employer’s matching contribution. “Don’t let that free money disappear,” cautions Jane.

Action Plan

AARP Retirement Calculator

Find out how much you need to save to build a secure retirement and get a free packet of flower seeds. 

AARP Resources

AARP Money

Visit AARP’s money channel for a wealth of information on saving, managing and protecting your money.

Retirement Accounts At Work

Learn more about 401(k) plans.

Start Late, Finish Rich

David Bach writing for AARP The Magazine has five tips on what you can do if you need to play catch-up because you got a late start saving.