The sooner you start saving for retirement, the more money you’ll have when you retire. However, if you haven’t started saving early, this article has you covered. Although, you can’t change the past you can still work on the future.
8 tips to help boost your retirement savings
Below are some tips to help you increase your retirement savings
Start saving now
The truth is the sooner you start saving for retirement, the better off you will be. Thanks to the power of compound interest, when you save money, you earn interest on your savings. Then this interest itself will earn more interest and the amount will continue to compound monthly.
And the earlier you start saving, the more time you have to compound your money until retirement. So, start saving as early as possible today so that you will be able to build enough wealth for retirement.
Contribute to your 401(k) account or workplace retirement plan
If you work for a company and your employer offers a 401(k) plan, you should take advantage of it. Not only is it a great place to start saving, it’s also one of the best places to grow your money. In this account, you will be able to contribute pre-tax dollars.
This means that you will not pay income tax on your savings. Your contributions will be tax-deferred until you begin withdrawals when you retire. However, some employers offer Roth 401(k) accounts. It may be best suited for you if you expect a higher tax bracket after retirement.
Meet your employer’s company match
One thing about company retirement plans is that they offer matching contributions. For every dollar you contribute to your 401(k) account, your employer will match your contribution in whole or in part with cash.
So, if your employer offers to match your 401(k) contributions, make sure you contribute enough to take full advantage of the match. This will help increase your retirement savings.
Open an IRA
Although IRAs don’t offer a matching contribution, they can help you build your retirement savings. There are IRA options, traditional and Roth IRA. Contributions to a traditional IRA are tax-deductible and are tax-deferred.
However, a Roth IRA may be a better option for you if you expect to be in a higher tax bracket after retirement. If your employer doesn’t have a 401(k), an IRA may be your best option. And you can even boost your retirement savings by contributing to your IRA in addition to your 401(k) account.
Your savings are automatic
Make your contributions automatically every month, so you don’t forget to send money to your retirement account. That’s because your monthly contributions will be transferred to your retirement account as soon as your paycheck hits your account.
And if you use your employer’s 401(k) plan to save, your contributions will be deducted before you get your paycheck.
Take advantage of catch-up contributions
One thing about 401(k)s and IRAs is that you can contribute a limited amount each year. However, if you reach age 50, you can exceed the normal contribution limit by making catch-up contributions. This is another way to increase your retirement savings.
Budget your expenses
Every single amount you spend can add up to your retirement savings. While you can’t avoid spending, you can minimize how you spend. You can negotiate your insurance rates or switch to an insurance plan with cheaper rates but quality coverage.
Moreover, if you pay for unused subscriptions monthly, you can deduct them. It will be helpful if you create a monthly budget and record everything you spend.
Delay Social Security until you’re close to retirement
Starting at age 62, you can take your Social Security benefits. However, if you delay taking it until you’re 67 to 70, you’ll get a higher amount. That’s because Social Security benefits increase by a certain percentage when you delay your benefits until your full retirement age. It may even increase the potential future survival benefit for your spouse.
FAQs
What’s the best place to put your retirement savings?
It depends on your financial profile, family situation, income and needs. What may be best for you may not be for another person. Retirement savings accounts also have tax benefits. While some are designed to save pre-tax dollars, others are for after-tax dollars.
So, depending on your financial profile, you have to choose the one that suits you. However, some good options include 401(k)s, 403(b)s, life insurance plans, and traditional and Roth IRAs.
What is most important when it comes to saving for retirement?
The most important thing when it comes to saving for retirement is to start early. The earlier you start saving for retirement, the more interest you’ll earn in your investment account over time.
How can I jumpstart my retirement?
Below are some tips to help you jumpstart your retirement planning
- Define your resources.
- Reevaluate your savings.
- Explore sources of retirement income.
- Work with a professional.
What are the 5 stages of retirement?
Retirement can be divided into five different stages which include:
- Pre-retirement phase.
- Honeymoon phase.
- Isolation stage.
- Re-adapt or find yourself phase.
- stability
Where is the safest place to keep your retirement savings?
The safest place to keep your retirement money is in low-risk investments and savings vehicles that offer guaranteed growth. These include fixed annuities, treasuries, corporate bonds, CDs and money market accounts.
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