Starting early, saving consistently, and investing wisely are all important.

While you are saving for retirement, you want to maximize each of your accounts. It's easy to forget about them when amounts are withdrawn from your paycheck automatically before you ever see that money, but it's important to pay close attention to your your 401(k) and Roth IRA accounts; in order to make the most of them, you need to understand their status. "Maximizing your retirement accounts will ensure you won't have to rely on social security benefits after retirement. It will also help you live comfortably as a retiree without becoming a burden for your family," explains Jill Gonzalez, an analyst at WalletHub. "Maximizing your retirement accounts means you will be able to build a nest egg that can withstand things like inflation, or market turbulence. This translates into having enough money through retirement to sustain the lifestyle you choose." Ahead, Gonzalez explains how.

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Credit: Jose Luis Pelaez Inc / Getty Images

Maximize Contributions

The first way to maximize your accounts is to start as early as possible. The earlier you start saving, the more money you'll have in your accounts when you reach retirement. "Even a small contribution now can make a very big difference over time," says Gonzalez. You can increase your contributions, within defined limits, over time as your income increases and your finances improve. But no retirement accounts mean you will be relying on social security funds, which may not be much whenever you leave the workforce.

Another way is to make sure to utilize the benefits of your employer to the fullest allowed. "To maximize your retirement accounts, you should contribute to your 401(k) if offered, as you can invest pre-tax income. If your employer also offers to match your contributions, make sure you contribute at least the minimum amount required to take full advantage of the match," she explains. Think of it as an easy way to double your savings efforts. And if you leave your employer for a different one, look into transferring your 401(k) to the new employer so that your accounts stays with you regardless of where you work.

Finally, you should consider opening an Individual Retirement Account (IRA) as well. These accounts are ones that you open yourself to save for retirement. "You can choose between a traditional or a Roth IRA or even a combination of the two," says Gonzalez. "Either way, you'll have a way to invest your money longterm in a tax advantageous way."

Fully Vested

Before you leave your job for another one, Gonzalez adds, make sure that you are fully vested in your retirement accounts. When you leave a job before being fully vested, you may not get the full employer match added to your 401(k) balance. That could mean losing a lot of potential savings. Generally, fully vested means about five years of continuous employment with an employer. At five years, you would own 100 percent of the vested employer amounts and it will be added to your balance when you transfer your account elsewhere. Of course, you may have other reasons for wanting to leave an employer before then, but this may be one consideration that you will want to think about before submitting that resignation letter.


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