A good way to save for retirement is to have payroll deductions deposited directly into a tax sheltered account. Then watch it grow.
First, find out if your employer has a 401(k) or a similar tax sheltered plan. Have the maximum amount deducted from each paycheck and deposited directly into this account so you never even see the money. Since the money is going into a tax-sheltered account you will not have to pay income tax on it now, so you’re ahead of the game before you even start. Once you get a little nest egg in your tax-sheltered account you can think about how to invest it. Diversify your investments. Spread them out over such things as fixed interest, mutual funds and stocks. Don’t leave it all in your company’s stock, even if your company suggests it (ie. Enron). As your retirement fund grows resist the temptation to withdraw money or borrow against it. Just leave it where it is, growing for the future.
If your place of employment has no company-sponsored retirement plan, then you will have to make your own. Open an IRA at a local bank or mutual fund company. If your employer will make automatic deductions for your account, that is the best way to go. If you can’t get the direct deposit, just make your own deposit monthly.
After you have put the annual maximum into your tax-sheltered accounts, you can continue to save with your after-tax money. Put it in a savings account, and later invest in mutual funds, bonds or individual stocks. You will have to pay taxes on your earnings, but you are saving for the future.