A shocking amount of Americans are unprepared financially for retirement. According to published data by LearnBonds, almost 50 percent of Americans had $100,000 or less in retirement savings in 2020. Furthermore, two-thirds of those aged 40 and older said they had less than $100,000 saved for their retirement years. When asked about their reasons behind the lag, many of them admitted to not knowing how much to save, when to start saving and how to make those savings grow. Investing for your retirement is not an overnight process but instead, should be a carefully planned journey. While investment does come with its risks, the good news is that there are ample choices out there if you are thinking of investing for your retirement. A great place to start: by doing your research into investments, tapping into traditional retirement investment options, and exploring tax-efficient ways to invest for your retirement healthcare. 

Check Out Your Standard Investment Account Options 

Whether you work for a non-profit or profit employer, most of them will allow you the option of subscribing to investment accounts like a 401 k, 457, I.R.As, and Roth I.R.As. The best place to start is to find out your options with your employer. Those working for a non-profit organization should be able to access a 401 (k), 403 (b), and 457 plan. Both 401 (k) and 403 (b) plans allow you to save without paying tax. 

However, you will still need to pay tax when you withdraw your savings so it is wise to plan for your 401 (k) tax costs ahead of time. With a 401 (k) you choose a percentage of your paycheck to be deducted and placed in a retirement account with companies like Vanguard. These funds are invested across a range of stocks, bonds, and mutual funds but save you the hassle of making those choices. Another great thing about a 401 9k) is that many employers tend to match your contributions which means that you get a boost to your retirement investments every month.

Think Index Funds If You Are An Investment Novice

Most investing experts recommend balancing your investment portfolio to manage the risks that come with it. Since you are investing for retirement, chances are that you will be looking to invest for the long term and index funds are a good way to do that. By spreading your capital between asset classes, you are diversifying your retirement investment portfolio. It also helps you if you are new to the investment game and want to avoid picking your own individual stocks. 

You still need to do your own research when choosing an index fund, however. If you prefer a more aggressive approach, a stock-heavy index fund like S&P 500. However, you can also choose to focus on a specific section of the market like ESG investing with Vanguard's FTSE Social Index Fund. A great tip is to tailor your choice of index fund according to the date you want to access it i.e. a targeted date index fund. If you prefer to pick your own individual stocks for your portfolio, the use of roboadviors investment advisory newsletters can help you as a beginner. Furthermore, Retirement Millionaire Review publishes a monthly newsletter for long-term investors looking to build their retirement portfolios and a list of 20 to 25 stocklists with performance data, which needless to say is a great source of information that can make the investment process much simpler. 

Save For Healthcare Costs In An HSA

A large part of retirement costs is attributed to the rising medical bills retirees are facing. While you would be eligible for Medicare upon turning 65, there is a $1464 deductible to pay. You will also have to contend with copays if you are hospitalized for 60 days or longer. Another option for saving for healthcare in retirement is to contribute to an HSA (Health Savings Account). If used for medical expenses, it is tax-free. You can also use an HSA for non-medical general expenses but you would have to pay a 20 percent early withdrawal penalty (if you withdraw before 65) and a withdrawal tax. As a bonus, any contributions to an HSA effectively reduce your taxable income each year. 

If you are choosing an HSA, look out for whether your employer offers access to one. This is often a good option since some employers also contribute to workers' HSA. According to the 2020 Employer Health Benefits Survey, employers contribute an average of $550 to employees' HSAs (or $1080 for those with family coverage). Consider your intended uses for the account when choosing an HSA as well. You will also want to look out for maintenance and account fees. A great tip: many HSAs include an investment option where you can invest in a select number of mutual funds. So your money can be left to grow in an HSA over the years until you need it in retirement for Medicare supplementary costs or medical bills not covered by Medicare.

The best advice for investing for retirement: start early and stay consistent. The earlier you begin building up an investment portfolio for your retirement, the more time you have to find the perfect mix for your retirement needs.