Know the basics

1. Commit now to saving now.

"The best time to plant a tree is 20 years ago; the second best
time is now." The same philosophy applies to saving for
retirement. See the difference an early start can make over the long term.

2. Decide where to save on taxes.

Your 401(k) Plan allows you to save on a pre-tax, Roth 401(k)
after-tax and/or regular after-tax basis. Which is right for you?

3. Decide how much to contribute.

To receive as much extra money from your employer as you can, contribute at least 4.5% of eligible compensation. But if you can save more, do it! Every dollar that you put into your 401(k) Plan now could grow dramatically with enough time.

When it comes to retirement, one size does not fit all. You may plan to travel the world or stay close to home; tend the garden or take up a cause. Whatever retirement you visualize, knowing how you'll cover your costs may help you enjoy the journey even more.

Into the fitting room

Here's one idea to consider: try on a retirement budget — or try on several! With online calculators, it can be quick and eas? to experiment with different retirement scenarios to see how far your money may stretch. If your plan offers it, check out Retirement Dream Machine. The retirement spending view lets you model:

• spending in retirement based on estimated expenses and goals.
• how long your retirement savings may last.
• how saving more or spending less could impact your retirement savings

Or simply write down a retirement budget on a sheet of paper.Whichever way you do it, think of it as putting a realistic price tag on your retirement dreams.

Take it in

Start with your expected monthly income during retirement, including withdrawals from your retirement plan, money from other savings or investments, and perhaps a part-time job. Factor in your Social Security benefit, too.

Let it out

If you haven't tracked your current expenses lately, consider starting there. Look at the past several months' cash receipts and bank and credit card statements, and list expenses you anticipate will continue in retirement.

Keep in mind that some expenses, such as commuting costs, may retire when you do. Other expenses, such as travel and health care, may go up. A recent study by the Employee Benefit Research Institute found that 49% of retirees say their spending in the first five years of retirement was lower than before they retired.

Alter to fit

If your estimated expenses during retirement are higher than your projected income, some alterations may be in order. Here are a few ideas to consider:

Delay retirement a few years, if feasible, to keep building your nest egg or plan to work part-time when retired.

• Move to a less expensive home or area of the country.
• Downsize from two phones (or two cars) to one.
• Pay off your credit card every month to save on interest charges.
• Check into swapping houses when you go on vacation instead of paying for a hotel.
• Give a gift of time to your adult children and grandkids, instead of your retirement money.

Sources:
2010 Retirement Confidence Survey, Employee Benefit Research Institute, March 2010 Issue Brief, www.ebri.org.

Quick Tips for Saving Hundreds of Dollars per Month, AARP, April 9, 2009, www.aarp.org.

Planning for the Stages of Retirement, Financial Planning Association, 2008.

This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for investment, accounting, legal or tax advice.

J.P. Morgan Institutional Investments Inc. (JPMII) has hired Financial Engines Advisors L.L.C. (FEA) to provide sub-advisory services. JPMII is a federally registered investment advisor. FEA, a federally registered investment advisor and wholly owned subsidiary of Financial Engines Inc., is an independent company that is not affiliated with J.P. Morgan Retirement Plan Services LLC or JPMII. Neither JPMII, FEA, nor their affiliates guarantee future results. Financial Engines is a registered trademark of Financial Engines, Inc. All other marks are the exclusive property of their respective owners. 2005-2011. Financial Engines, Inc. All rights reserved. Used with permission. J. P. Morgan Retirement Plan Services provides plan recordkeeping and administrative services.