5 tips for retirement planning

1. Save as much as you can.

“Everyone should be saving at least 5 percent of their income — in addition to the 12.4 percent saved for Social Security — for retirement throughout their entire career,” Martin says. “The longer you save, the more the magic of interest compounding will help your money grow.”

Here’s a powerful example of what compounding can do: “If you have the average U.S. household income of $58,000, and you save 5 percent of your earnings, or $242 a month, starting when you’re about 25 years old, by the time you reach retirement age you would have almost $500,000, assuming a 6 percent annual return,” he explains.

If workers wait until they are in their 40s or older to save for retirement, they will have to put a lot more away to achieve the same results, Martin points out.

2. Get a financial planner.

“Everyone should have a certified financial planner to help manage his overall financial picture,” Martin says. “Even I do, and I know a lot about personal finance. Two heads are better than one.”

Martin recommends choosing a fee-based financial planner who charges a flat rate rather than a commission. Financial planners are especially important for the self-employed who do not have access to traditional company retirement plans, he notes.

3. Don’t leave money on the table.

It pays to save for retirement, and not only in investment returns, according to Martin. “Many companies will match your 401(k) contributions up to a certain amount,” he says. “You want to make sure you’re contributing enough to get the maximum match, otherwise you’re throwing away free money.”

Many types of retirement accounts also offer income tax benefits. “Investing in your IRA and 401(k) not only reduces your taxable income now, it will likely lower your tax burden in retirement,” Martin explains.

4. Consider working longer.

Retiring at 65 is becoming a thing of the past, according to Martin. “Many people today are physically able to keep working well past 65. I’m 69, and I still work full time.” He suggests that older workers consider part-time or freelance consulting work to supplement their retirement income after they leave their regular jobs, especially if they have saved only a modest amount.

5. Remember that knowledge is power.

Learn as much as you can about personal finance, whether that involves reading books, taking classes or meeting with peers to share savings tips. “I believe we need to start offering personal finance courses in high school,” Martin says. “We need to work on changing our financial culture in this country and save more.”