6 Savings Milestones for Retirement

Starting your first 401(k) The first milestone is different for everybody. It happens when you get your first job. If your employer offers a 401(k) plan, the advice of financial planners is pretty much unanimous: Take that offer, no matter how young you are and how remote retirement seems to be.Even teenagers who get a regular paycheck can open a Roth IRA. The message from the first retirement milestone is clear. The sooner you get the magic of tax-free compound interest working for you, the better."The earlier you get started, the easier it is, not just to accumulate funds, but because it gives you more time to think about what your retirement will look like," says Tad Fryer, a manager for Charles Schwab in St. Louis.

Jump ahead to age 50

For the next retirement milestone, you have to jump a few decades ahead to age 50. That's when the "catch-up" provision kicks in. If you've been lax about socking away money in your employer-sponsored 401(k) retirement plan, the catch-up allows you to make up for lost time by increasing the amount you contribute to the plan, according to the IRS. If you are age 50 or older, you can add an additional $5,500 to the contribution limit for 2010. (A catch-up provision also allows you to contribute an extra $1,000 to an IRA.) Other workers can contribute a maximum of $16,500 per year to a 401(k), Fryer says.

Bumping up the amount you stash away in your 401(k) or other plan, even if you're late to the game, pays off in the long run.?

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