Upbeat music plays throughout.
 
Narrator: Retirement is something we all look forward to—a time to kick back and relax.

We all know the goal of retirement savings—to have enough money to cover our expenses and to have a little left over for the fun stuff.

What's tricky is knowing the best way to pursue those goals, like how much to save and which avenue of investing to choose.

So, let's go over some retirement savings basics. To plan for retirement, you need to decide three things:

•    Your savings goal
•    What type of retirement account you'd like to open and
•    How to manage the money in your account

Let's begin with your savings goal.

Creating a retirement plan helps you figure out when you're going to retire and how much money you'll need to live comfortably, among other things. By identifying how big your nest egg should be, you'll be able to determine how much you need to save each month and how to allocate your investments.

One quick way to come up with a retirement savings goal is by using a retirement calculator. These calculators are easy to find online and usually free to use.

Animation: Computer screen shows current savings and savings needed.

Narrator: By answering a few basic questions, like your age and how much you plan to save each month, you can then estimate how much money you'll potentially have when you retire.

After establishing a savings goal, your next step might be to open a retirement account.

Be sure to talk with your broker, financial advisor, or tax advisor to discuss what kind of retirement account might be right for you.

There are a number of different retirement accounts available. Let's examine some of the most common. Most retirement accounts are either employer-sponsored or individual accounts.

Employer-sponsored accounts are retirement accounts offered by a company to its employees. One example of these is a 401(k).

Employer-sponsored accounts can provide a number of benefits, including automatic paycheck withdrawal and tax benefits. Some companies even match part of an employee's contributions.

One drawback to employer-sponsored accounts is that your choices for how you'd like to invest your money may be limited. If your employer offers any retirement benefits, consider contributing enough to receive any matched funds so as not to leave free money on the table.

You may be able to supplement your employer retirement savings with another account that may offer more investment choices, like an Individual Retirement Account, or IRA, or some other sort of retirement account. But if you have an employer-sponsored plan, consider prioritizing that one first.

A primary benefit of an IRA is that it allows your investments to grow tax deferred.

In an IRA, you can typically invest in a wide variety of products like stocks, bonds, and mutual funds.

There are several types of IRAs. Let's compare two of the most common: a Roth IRA and a traditional IRA.

When choosing between the two, the primary question you need to ask yourself is: Do I want to pay income tax now with a Roth IRA or later with a traditional IRA?

With a Roth IRA, you pay taxes on your contributions now. However, with a traditional IRA, you're not taxed on your contributions. Instead, you pay taxes when you reach retirement age and begin withdrawing money from the account. But it's worth noting that if you also contribute to an employer-sponsored retirement account, your contributions to a traditional IRA may not be deductible.

So which tax benefits are better for your retirement savings? Well, that depends. Do you think your income tax rate is higher now?

Or will it be higher when you reach retirement?

If you expect income tax rates to be higher when you reach retirement, a Roth IRA may be preferred. However, distinct tax implications represent just one of the differences between a Roth and a traditional IRA. Be sure to investigate all the details of each IRA before you open an account.

Once you've opened an account and started making contributions, the final step is deciding how you'll invest your money.

On-screen text: Disclosure: All investments involve risks, including loss of principal.

Your choice depends on how involved you want to be in managing your portfolio and your risk tolerance. Do you want to manage your investments yourself…

Or would you prefer to leave your investing up to a financial professional?

Maybe you're somewhere in the middle and want some say in how your money is invested but don't want to check your portfolio every day.

Find out what services are available with your retirement account. Many institutions provide a variety of choices that allow you to be as involved as you'd like when it comes to your retirement investing.

Now that you know a few basics about retirement planning, the next step is up to you. Set your goal, establish your retirement accounts, and start saving. The best time to start saving is today.

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