Seek a job with good retirement benefits. Finding a job that offers a traditional pension, a significant 401(k) match, or a profit-sharing plan can significantly improve your retirement security. But only about half of the workforce has access to retirement benefits at work, and low-income workers are the least likely to have them. "About four in every ten 25- to 29-year-olds who are working are working in jobs that don't offer retirement plans," says Margery Austin Turner, vice president for research at the Urban Institute. "Low-income workers aren't accumulating the assets they are going to need for a secure retirement." When an employer contributes to a retirement plan, you can build a significant nest egg faster.
Don't spend your savings early. Once you begin to build a nest egg, try not to spend any of it before retirement. "Many of the withdrawals from 401(k)s and IRAs were associated with job loss and disability and investment sorts of things, like home purchases," says Butrica. For these types of emergencies you can sometimes tap your IRA savings early without being hit with the typical 10 percent early withdrawal penalty. But early withdrawals also mean that you won't have that money and the valuable compound interest it could have generated in retirement. "I think we need to encourage people to avoid unnecessarily dipping into their savings before retirement," says Butrica. "Workers must consistently make large contributions to their accounts to accumulate significant savings. This is going to be very difficult for low-wage workers to do."