Retirement Planning for Your 30s to Early 40s

Goal: Develop the habit of saving.

Savings: 1.5 times your annual salary by age 35.

• Take full advantage of my 401(k) match. Your employer-sponsored retirement plan is the easiest way to put your savings on autopilot. And if you take full advantage of your company match, you could earn 50% to 100% on your money before taking on any market risk.

• Boost my 401(k) contribution. As your paycheck grows, your savings rate should too. Sign up for "auto escalation" to boost your contributions by a percentage point or so a year. If your 401(k) doesn't offer this feature, sock away half or more of each raise.

• Find other tax-advantaged ways to save. Already maxing out on your 401(k)? If you make less than $120,000 -- or $177,000 for married couples filing jointly -- check out a Roth IRA. Already hitting the $5,000 annual IRA limit? Move on to investment options such as index funds that don't expose you to stiff tax bills.

• Cover six months of expenses. Make sure you've got an emergency stash, so if you get laid off you won't be forced to dip into your 401(k) and IRAs. Put this money in a safe place like an FDIC-insured bank account or CD, or a high-quality money-market fund.

Invest for growth. You may feel skittish about stocks, given the recent market turmoil. But with retirement still two to three decades away, your best shot at building an adequate portfolio is to put most of your retirement savings -- 80% or so in your thirties -- in stocks and ride out turbulence along the way.

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