How to make your money work for you

EAST PROVIDENCE, R.I. (FOX Providence) - Planning for your retirement is important at any stage of your career. But, just how to make your money work for you is the key.

Peg Marty, Executive Vice-President of Citizens Bank explains how to sort out the dos and don'ts of retirement savings.

Knowing what you'll spend is key to saving for retirement.

You should expect to spend 80% of your current income every year in retirement. Citizens Bank has online tools and calculators to help you determine how much you should be saving and what retirement option is best for you.

Take advantage of your companys' 401K or 403(b) plans.

If your employer matches your contributions, try to contribute as much as will be matched. Those matching funds are like free money. The earlier you start saving, the better. Time and compounding interest are your most powerful allies. All contributions and earnings are tax deferred.

Consider IRAs-Roth or Traditional

If you make under $100,000 a year, a Roth IRA might be right for you because it allows your money to grow tax-free.

Don't cash out your 401k balance when you leave an employer.

Unless you are separated from service having reached age 55, you will generally be required to pay a 10% early withdrawal penalty. In addition, your entire balance will be subject to income taxes in the year it was withdrawn. After taxes and the 10% penalty, it is not uncommon be left with less than 50% of your account balance.