Most People Who Achieve Their Retirement Goals Are Good at These 6 Things

What does it take to save enough for retirement? Does it take Buffett-level knowledge of the markets? An uncanny ability to understand dividend income? 

Not necessarily. It takes just some basic knowledge and dedication (and a little bit of know-how) to successfully save for retirement. 

You might wonder where you fall on the grand spectrum of those who save for retirement. According to the Transamerica Center for Retirement Studies, the total household retirement savings for all workers totals approximately $50,000. Median total household retirement savings totals about $57,000 among full-time workers, $23,000 among part-time workers, and $71,000 among the self-employed, according to Annuity.org.

Let's find out what it takes for you to get above and beyond those figures and also determine whether you're on the right track.

1. People who meet their retirement goals save regularly.

They display a dogged determination to save for their future retirement. They never stop saving at least 10% of their income for retirement, and if they can, they save at least 15% or more of their pre-tax income each year. 

Fidelity analyzed national spending data among retirees and found that most people will need between 55% and 80% of their preretirement income to maintain their lifestyle in retirement.

What does that percentage mean for your particular situation?

2. They get the employee match.

Employees eligible for an employee match get the match. The most common employer match amounts to 50 cents on the dollar, up to 6% of the employee's salary. However, you should realize that investing sometimes takes longer. Vesting means that you have full ownership and control over your money. 

Most employers — 82% — that offer traditional 401(k) plans match a portion of their workers’ account contributions but just 28% allow employees to immediately take full ownership of that extra amount, according to XpertHR.

However, you'll need to invest more than just the match to have enough saved. And if you job-hop a lot, you may make it harder for yourself to become vested in your employer's plan. 

3. They boost their contributions over time.

Have you ever tried putting "boost retirement contribution X%" on your calendar at the end of the year each year? It can make a huge difference. 

Even increasing your retirement savings by 1% can make a difference, according to Fidelity's interactive tool. After 20 or 30 years of increasing by 1%, you can make a tremendous impact. Let's take a look at an example. 

Imagine you're 22 and you have a $50,000 salary and a nominal investment growth rate of 7% with a hypothetical nominal salary growth rate of 4% (2.5% inflation + 1.5% real salary growth rate). You could increase your contribution and have an additional $266,883 for retirement. On the other hand, if you increased by 5%, you could have an additional $1,334,418 for retirement, based on Fidelity's calculator.

On the other hand, let's say you're 45 instead. Based on the calculator, you could have an extra $36,270 (by upping your retirement investment 1%) or an extra $181,353 if you go up to 5%. 

4. They stay diversified.

Successful retirement savers mix up their asset allocation to stay diversified. In other words, they invest in a mixture of industries and financial instruments. Staying diversified reduces the risk of investments dropping in price at the same time. When you diversify your investments, you mitigate losses even when you experience gains on others.

In other words, you don't put all your money into one company that "shows a lot of promise." You spread your money out, possibly using index funds to make sure you're diversified. You can also arrange for the funds to reduce risk by automatically shifting your portfolio balance from equities (riskier) and stick to bonds (less risky) as time goes by.

5. They live below their means.

Living below your means can help you build wealth. Many people who succeed at meeting their retirement goals shovel money toward their investments rather than spending it on items that depreciate or things that they don't need. Let's take a look at a few signs that you live below your means: 

• You pay off your credit card balance every month.
• You have an emergency savings account that contains between three and six months' worth of savings.
• Your home payment (such as for your mortgage) costs you less than 25% of your take-home pay.
• You save a consistent percentage of your income each month.
• You don't buy a lot of nonessentials (home decor, vacations, extra clothes, etc.)
• You don't live paycheck to paycheck — you have extra left over after paying the bills each month. 

A total of 54% of U.S. consumers live paycheck to paycheck, according to the Paycheck to Paycheck Report. This equates to 125 million U.S. adults. Of that group, 21% struggle to pay their bills, which means they have little to no money left over after spending their income. Successful retirement savers make sure they away from a paycheck-to-paycheck existence.          

6. They use tax-advantaged accounts. 

When you put money in pre-tax funds, you reduce your taxable income. This means you get to keep more of your money. 

What are tax-advantaged investments? They include:

• Municipal bonds: Debt securities issued by a state or local government in which you lend the government money and they repay you with interest when the bond comes due.
• Unit investment trusts (UITs): U.S. investment company that buys and holds a portfolio of stocks, bonds, or other securities.
• Annuities: An insurance company product that is designed to help protect you from the risk of outliving your income with long-term payments.

• IRAs and qualified retirement plans such as 401(k)s: You can grow these types of retirement savings vehicles tax-deferred until retirement.

Ready to Achieve Your Retirement Goals?

Are there other factors that help people achieve their retirement goals? Of course! For example, many people who save well also learn all they can about saving for retirement. They might also gravitate toward multiple income streams, focus on personal growth and solely invest money where they know it will grow.

Spend time learning about saving and investing so you can also save well for retirement.