10 Tips To Help You Boost Your Retirement Savings (At Any Age!)
It’s never too early or too late to start saving for your retirement. If you are just starting out, focus on saving as much as you can now. And If you are nearing retirement, consider increasing contributions to your savings or delaying Social Security.
This might surprise you, but the earlier you start saving, the better. Even at the age of twenty, $1000 invested every year will earn you as much as if you were to invest $5000 monthly at the age of 50.
And even if you began saving late or have yet to begin, it’s important to know that you are not alone. This article will offer you some tips to start increasing your retirement savings.
Remember, it’s never too late to get started. You know what they say, better late than never!
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.These pieces of advice will help you boost your savings so when you retire you’ll be able to live the life you want or even leave a lasting legacy.
Start saving now!
Time is a precious commodity, and nothing makes your invested dollars more valuable than compound interest. Compound interest will allow your investment to grow without costing you anything. That’s why $10,000 today has the potential to be worth $30,000 in ten years.
Set A Goal!
Setting a goal gives you something to strive for. Ask yourself, why do you want to save money for your retirement? Once you figure out why, make it your goal and you’ll never lose sight of it!
Put Your Money In A 401k If You Can.
Many employers offer traditional 401k plans. 401ks allow you to contribute pre-tax money, which can be a significant advantage.
Let’s say you’re in the 20% tax bracket and plan to contribute $100 per pay period.
Since that money comes out of your paycheck before taxes are assessed, your take home pay will drop to $80. That means you can invest more of your income now without lowering your standard of living.
Your employer may also offer a Roth 401k, which uses income after taxes rather than pre-tax. You should consider what your income tax bracket will be in the future when you reach retirement to help you decide whether this is the right choice for you.
Meet Your Employer’s 401k Match.
Many employers will not only offer you a 401k, but they’ll even offer to match your 401k contributions (for every $2 dollars you contribute they might contribute $1, etc). Make sure you contribute at least enough to take full advantage of the match.
For example, your employer may offer to match 50% of your contributions up to 5% of your salary. That means if you earn $100,000 a year and contribute $5,000 to your retirement plan, your employer would contribute another $2500.
That’s free money. Don’t miss out!
Open An IRA. (Individual Retirement Savings Account)
I realize not everyone is lucky enough to have a 401k option. But anyone, including you, can establish an IRA to help build savings for retirement.
You have two options: Traditional IRAs, where your money will grow tax free until you decide to start taking distributions and Roth IRAs, where you pay taxes upfront on the money you contribute instead of later when you retire.
Traditional IRAs are great for those who don’t have as much money to invest with initially. Meanwhile Roth IRAs are a good route to go if you plan on being in a higher tax bracket then you are now upon retirement.
Take Advantage Of “Catch-Up” Contributions.
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.
So what’s the good news? Once you reach age 50, you’re eligible to go beyond the normal contribution limits with catch-up contributions to IRAs and 401ks.
If you haven’t been able to save as much as you would have liked, catch-up contributions can help boost your retirement savings. Take a look at the chart, below, for contribution limits for individuals over the age of 50.
Automate Your Savings.
Make your retirement contributions automatic each month and you’ll be able to grow your retirement savings without having to think about it. Ever. Or at least until you retire.
Cut Down On Expenses.
Are you going to out to eat every day? That could cost you thousands of dollars a year. Even if it’s just a cup of coffee from Star Bucks. Also, try lowering your insurance premiums or your premium channel subscriptions. You can negotiate for lower rates, believe it or not!
Save Extra Money.
Did you get any extra money? A raise at work, a winning lottery ticket, unexpected gift? Don’t just spend it. Save it instead.
I know as well as you do that it can tempting to take your tax refund or salary bonus and splurge on designer fashions, a vacation or a car. But the question is, do you want to live better now or later when you retire?
Delay Taking Social Security.
I know, who would think of doing such a thing? Age 62 is the earliest you can begin receiving Social Security benefits, but for each year you wait (until age 70), your monthly benefit will increase by the hundreds, adding up to several extra thousand dollars per year.
That’s all for our top ten retirement tips. If you have questions, fire away in the comments below. If you’re wondering what the best plan for your circumstances is, schedule your personal retirement consultation with Royal Legal Solutions today.