Retirement Planning: 9 Tips to Help You Boost Your Retirement Savings
If you want to have retirement savings, you’ll need to start saving and investing sooner rather than later. If you haven’t started saving for retirement, don’t stress, there are some steps you can take to increase your retirement savings.
Keep reading to uncover these nine tips to help you boost your retirement savings:
1. Focus On Your Retirement Savings Today
If you just started to put aside money for retirement, you’ll want to start investing and saving as much of that money as you can now, not later. By doing so, you will take advantage of compounding interest. This means that your assets will generate earnings. This will definitely work in your favor.
One way to start your retirement savings is to set a goal. Knowing how much you will need to save not only makes saving and investing easier, it also can make saving for retirement more rewarding.
If you set benchmarks on the way, you will find satisfaction as you pursue your retirement goals. There are online tools that can help you track your retirement goals like a Personal Retirement Calculator. This helps you figure out what age you can retire at, and how much you will need to invest and save.
2. Contribute To Your 401(k)
If your employer offers you a traditional 401(k) plan, contribute to it. A 401(k) lets you contribute pre-tax money, which can be a huge advantage.
For example, let’s say you are in the 12 percent tax bracket, and you want to contribute $100 per pay period. Since that money comes from your paycheck before taxes, your take-home pay drops to only $88, which means you can invest more of your income without it hitting your monthly budget as hard.
3. Meet Your Employer’s Match
If your employer will match your 401(k) plan, you’ll want to contribute at least enough so that you take full advantage of the match.
Let’s say your employer offers to match 50 percent of employee contributions up to five percent of your salary. If you earn $50,000 a year and contribute $2,500 of toward your retirement plan, then your employer would put in another $1,250, which is basically free money. Take advantage of this.
4. Open An IRA
You should also consider establishing an IRA (Individual Retirement Account). An IRA can help build your retirement savings. There are three primary options, you can do a traditional IRA, a nondeductible IRA, and a Roth IRA.
Each type of IRA offers various advantages. It is important to determine which one is appropriate for you. Your contributions are tax-sheltered so your investment earnings will have the chance to grow until you make withdrawals during your retirement.
5. Take Advantage Of Catch-Up Contributions
If you are 50 years old or older, you can take advantage of catch-up contributions. One of the reasons you want to start saving for retirement early is because yearly contributions to 401(k) plans and IRAs are limited. However, once you reach the age of 50 you are able to go past the normal limits of catch-up contributions to 401(k)s and IRAs.
If you weren’t able to save as much as you wanted over the years, catch-up contributions are a great way to help boost your retirement savings.
6. Automate Your Savings
You have likely heard of the phrase “pay yourself first.” This is why you should make your retirement contributions automatic on a monthly basis. This way you will have the chance to grow your nest egg without ever thinking about it.
You’ll want to start automating your savings as soon as possible. Even if you feel that you don’t have enough money to contribute a sustainable amount, you’ll want to put away as much as you can as soon as you can.
This helps you out in two ways. The first way this helps it reduces your taxable income this year. A second way this helps is it gives your money more time to grow. Since the money you put in towards your retirement savings compounds over time, even a small contribution today, can add up to thousands of dollars in the long term.
7. Rein In Spending
In addition to saving, you also want to take a look at your budget. Perhaps you want to try to negotiate to lower your car insurance rate or save money by bringing your lunch to work instead of buying it every day. There are some online tools you can use to help show you where your money is going.
You can use tools like a cash flow calculator which can show you where you spend your money, and places you can try to reduce your spending. This way you’ll have more money you can invest and save for retirement.
8. Stash Extra Funds
If you have extra money, don’t spend it. Any time you get a raise, you’ll want to increase your retirement contribution percentage. You’ll want to dedicate at least half of your new money to your retirement plan, instead of blowing it on a vacation.
Sure, it’s tempting to take your bonus or tax refund and splurge it on something fun like designer shoes or a vacation, you shouldn’t. Instead try treating yourself to something small, and use the rest of that money towards your retirement goal.
9. Consider Delaying Social Security
This tip is key, try to delay your social security until you get closer to retirement. For each year you can delay Social Security before you reach the age of 70, you can increase the amount that you receive in the future.
You can get social security retirement benefits as early as the age of 62, but for each year you wait for these benefits, your monthly benefit will increase, and that extra income will quickly add up.
Even if you push your retirement back one year, it can make a huge difference. It can also increase survivor benefits for your spouse. You’ll want to understand how much you want to put away for retirement and find a way to increase your contributions.
Start Saving Now
One of retiree’s biggest regrets is saving too little and starting to save too late. So make the effort for your retirement savings now, and your retirement will be something to look forward to.
For more financial resources, check out our blog.
Retirement. Your Vision. Our Passion
Investment Advisory Services offered though Macino Financial Services, a Registered Investment Advisor.