When it comes to early retirement planning, putting away money for your retirement is a given. Whether you focus on a 401(k) or a savings account or a Roth IRA, hopefully you’ve begun saving for retirement. If not, well, you better get your butt in gear because time is wasting. In this post, I will describe the very simply yet effective way that I put money away for retirement.

Now, my process is different from many because I work for a small company and do not have a 401(k) plan. Because of a lack of a 401(k), I use a Roth IRA to put away money. If you do have a 401(k), I’d encourage you to continue to contribute to that plan up until you max out your company matching. All money saved on top of that can be put away in the manner I describe here.

Currently, the maximum contribution for my Roth IRA is $5,500 a year. I max this out each year. Basically, I put money away each month into my ING Direct high interest savings account with the intention of eventually going into my Roth IRA.

It is not too difficult to have $5,500 in that account by the end of the year (now that I’m married, I’m trying to double that to max out my wife’s Roth IRA as well). When January 1 rolls around for the next year, I immediately put the total $5,500 in my Roth IRA and thus maxing out the contributions for that year.

This way I can immediately put that money into the stocks that I want right off the bat. With my savings account empty, I begin the process of putting money away into that savings account that will eventually be contributed into my Roth IRA at the start of the next year.

The Alternative

Obviously, the alternative to this early retirement planning process would be to just put away money each month into your Roth IRA as you save it. My process is more simple and allows me to buy fewer, larger positions instead of buying smaller, more frequent positions in my Roth IRA. This cuts down on commission costs (although I don’t pay any commissions with Zecco anyways), but is also more in-tune with my investing style.

If you are currently following this alternative method and it’s not working out that great for you, perhaps you should try doing it the way I do as described above. With that said, if this early retirement planning process isn’t for you, that’s fine, just find a way that works for you to kickstart your savings for retirement!