10 Tips To Help You Boost Your Retirement Savings

Retirement may be far off for some while closer for others like me. No matter when it is for you, you should begin saving for it as soon as possible. These to tips will help get you started

 

I don’t know about you, but I can’t wait until the day I retire. Whether you plan to retire early or work a few more years like me, it’s never too late to boost your retirement savings. Whether you just started working or you’re nearly done, you can still potentially grow your nest egg.

When planning for retirement, the truth is that the earlier you start saving and investing, the better off you will be, thanks to the power of compound interest. Even if you began saving late or have yet to begin, it’s important to know that you are not alone. There are steps you can take to increase your retirement savings. It’s never too late to get started.

Consider the following tips, which can help you boost your savings, no matter what your current stage of life and pursue the retirement you envision.

1. Focus on starting today

Especially if you’re just beginning to put money away for retirement, start saving and investing as much as you can now, and let compound interest have an opportunity to work in your favor. Compounding is the ability of your assets to generate earnings, which are reinvested to generate earnings, which are reinvested to generate their own earnings. The more you can invest when you’re young, the better off you’ll be.

2. Contribute to your 401(k)

If your employer offers a traditional 401(k) plan, it allows you to contribute pre-tax money. This can be a significant advantage. Say you’re in the 15% tax bracket and plan to contribute $100 per pay period. Since that money comes out of your paycheck before taxes are taken, your take-home pay will drop by only $85. This means you can invest more of your income without feeling it as much in your monthly budget.

If your employer offers a Roth 401(k), yes a Roth 401(k) not Roth Ira, which uses income after taxes rather than pre-tax fund, you should consider what your income tax bracket will be in retirement to help you decide whether this is the right choice for you.

3. Meet your employers match

If your employer offers to match your 401(k) plan, make sure you contribute at least enough to take full advantage of the match. For example, an employer may offer to match 50% of employee contributions up to 5% of your salary. That means if you earn $50,000 a year and contribute $2,500 to your retirement plan, your employer would kick in another $1,250. It’s essentially free money. You better get that money, don’t leave it on the table.

4. Open an IRA

Consider establishing an individual retirement account (IRA) to help build your nest egg. You have two options, the Traditional IRA and the Roth IRA. A Traditional IRA may be right for you depending on your income and whether you and/or your spouse have a workplace retirement plan. Contributions to a Traditional IRA may be tax-deductible and the investment earnings have the opportunity to grow tax-deferred until you make withdrawals during retirement.

If you meet the income eligibility requirements, Roth IRA may be a good choice for you. They are funded with after-tax contributions, so once you have turned age 59½, qualified withdrawals, including earnings, are federal-tax-free (and may be state-tax-free) if you’ve held the account for at least five years.

5. Take advantage of catch-up contributions if you are 50 or older

One of the reasons it’s important to start saving early if you can is that yearly contributions to IRAs and 401(k) plans are limited. There is good news though.  Once you reach age 50, you’re eligible to go beyond the normal limits with catch-up contributions to IRAs and 401(k)s. So if over the years, you haven’t been able to save as much as you would have liked, catch-up contributions can help boost your retirement savings.

6. Automate your savings

You’ve probably heard the phrase “pay yourself first.” Make your retirement contributions automatic each month and you’ll have the opportunity to potentially grow your nest egg without having to think about it. Make automated regular contributions to your IRA. Here is a little more information on how to automate your savings

7. Rein in your spending

Examine your budget. You might negotiate a lower rate on your car insurance or save by bringing your lunch to work instead of buying it. Determine where your money is going by tracking your spending. Find places to reduce spending so you have more to save or invest.

8. Set a retirement goal

Knowing how much you’ll need not only makes the process of saving and investing easier but also can make it more rewarding. Set benchmarks along the way, and gain satisfaction as you pursue your retirement goal.

9. Stash extra funds

Extra money? Don’t just spend it. Every time you receive a raise, increase your contribution percentage. Dedicate at least half of the new money to your retirement plan. I know  it may be tempting to take that tax refund or salary bonus and splurge on a new designer purse or a vacation, don’t treat those extra funds as found money. Treat yourself to something small and use the rest to help make big leaps toward your retirement goal.

10. Consider delaying Social Security as you get closer to retirement

This is a big one! Did you know that for every year you can delay receiving Social Security before age 70, you can increase the amount you receive in the future? Age 62 is the earliest you can begin receiving Social Security retirement benefits, but for each year you wait (up until age 70), your monthly benefits will increase.

The additional income adds up quickly. Pushing your retirement back even one year could significantly boost your Social Security income during retirement.

Recognizing the need to put money back for retirement is the first step. Understand how much you want to put away for retirement, and find creative way’s to increase your contributions. Making the effort now will help make your retirement something to look forward to and help you not to worry about retirement.

 

*Part of Financially Savvy Saturdays on brokeGIRLrich.*

Facebooktwittergoogle_plusredditpinterestlinkedinmail

on 10 Tips To Help You Boost Your Retirement Savings

  1. Wendy
    February 7, 2018 at 6:02 pm (6 months ago)

    This was a very helpful article! I didn’t know about the ability to do the catch up savings in your 50’s. Also, I’ve been afraid of the idea to hold off on social security in case the funds ever run out but I can see the benefit to waiting now, thank you!

    Reply
    • tracie45
      February 11, 2018 at 1:54 pm (6 months ago)

      Thank you Wendy, I am glad that you found value in this post. Thank you for reading and commenting!

      Reply
  2. Amar Singh
    February 9, 2018 at 8:36 am (6 months ago)

    The whole article was very well written and that just tells you that the author knows what he’s talking about. Added a lot to my knowledge and cleared so many things up.

    Reply
    • tracie45
      February 11, 2018 at 1:49 pm (6 months ago)

      Thank you Amar! And thanks for reading an commenting!

      Reply
  3. Ruth Epstein
    February 11, 2018 at 8:09 pm (6 months ago)

    Fantastic post and has opened my eyes to some of the mistakes I have been making thanks

    Reply
    • tracie45
      February 12, 2018 at 6:10 pm (6 months ago)

      I am glad you found value in this post, Ruth! Thank you for reading and commenting!

      Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

Comment *