PORTLAND, Maine (NEWS CENTER) -- Certified Financial Planner Sarah Halpin gives advice on planning for retirement.

Your Twenties and Thirties

Retirement can feel like a long way away when you are in your late twenties and early thirties. Despite the challenges of entry level salaries and student debt payments the good news is you can take full advantage of time and compounding if you pay yourself first with regular retirement savings contributions.

* Sign up for your employer 401k or other type of retirement plan. Try to save 5% - 10% of your monthly gross income. If your employer matches your contributions, make sure you are contributing enough to get the match. This is free money you don’t want to pass up. If your employer doesn’t offer a plan, consider opening an Individual Retirement Account (IRA) as a way to save. Look into setting up an automatic savings plan into a Roth IRA which offers the potential for tax-free distributions at retirement.

* This is a time where your retirement plan investment mix can be overweighted in stocks in an effort to earn better returns and the potential compounding power of time is on your side. The longer you save, the better compounding may work for you because compounding needs time to work. In fact, saving a little for a long time generally adds up faster than saving a lot for a short period of time

* Check out the “Ballpark E$timate” at www.choosetosave.org an easy tool to calculate how much you are likely to need in savings to maintain your current lifestyle in retirement and commit to seeking out other resources to improve your financial literacy. The more financially literate you become, the more likely you are to take the steps needed to achieve a secure retirement. Basic financial management practices like “living within your means”, budgeting, understanding credit, saving and investing are critical skills. The more knowledgeable you are, the more successful you are likely to be.

Your Forties and Fifties

At this stage of your life, your earning power is likely to have increased but, saving for retirement may have become more of a balancing act between your long-term financial goals, your short-term needs and setting expectations with children.

* It's an extremely important time to have a more comprehensive retirement plan where you are assessing and refining retirement plan goals, honing in on estimating future retirement expenses, looking at where income will come from during retirement and testing your plan’s assumptions to see how it’s going to handle inevitable unexpected expenses and challenges such as healthcare costs.

* Depending on your retirement goals, you might need to be saving more than 20% of your income while in your 50s. At age fifty, you are now allowed extra “catch up” contributions to both IRAs and 401(k)s if you need to save more aggressively in retirement accounts. You should be monitoring your

investment and asset allocation strategy so that it is aligned with your retirement plan goals and meeting risk and return expectations.

* Every decision you make can move you toward or away from your goals. Beware of taking 401k loans or early cash distributions from your retirement accounts if you change jobs. Be aware that if you withdraw cash from your retirement accounts before age 55 or 59 1/2 (depending on the type of account and when you leave your employer) you will incur high taxes, and early withdrawal penalties.

Your Sixties

Hopefully you have been saving for decades, you are on track to retire and now it’s time to create a withdrawal strategy designed to provide you with the sustainable income you need throughout a long and healthy retirement.

* Following an effective income plan for retirement is as important as saving for it. Your withdrawal strategy has to be designed to help your assets last a lifetime and be strong and flexible enough to withstand unanticipated expenses or tough investment markets. It has to help provide you with the income you need to live the life you want to live, while minimizing the effects of taxes, and keeping your investment mix diversified and in line with your personal situation.

* Deciding when to take Social Security is an important decision in your sixties. Be aware of the consequences of not waiting until your full retirement age, which for some people is as high as age 67. Married couples may want to complete a Social Security Calculator which can help provide information on claiming strategies for social security benefits.

* As you near retirement, your investment risk tolerance and comfort level with financial markets especially during periods of volatility may be changing. A substantial market downturn can have a greater impact on investors who are taking withdrawals and have relatively shorter time horizons. You may be thinking about balancing the need for continued growth throughout retirement with a desire to help protect your assets and generate income from investments.