10 Ways to Increase Your Retirement Savings Regardless of Your Age

10 Ways to Increase Your Retirement Savings Regardless of Your Age

You can still build your retirement nest egg, no matter how young you are. Even if you haven't started saving yet, you don't need to be discouraged. There are many steps you can take in order to increase your retirement savings. It's never too late for you to start saving, and that it doesn't matter what stage of life you are in, these tips can help you increase your savings and achieve the retirement you want.

 

1. Start today!

If you are just starting to save for retirement, it is a good idea to start now. Greenberg states that the earlier you start, the better you will be.

 

Even if you only invest a little, it is worth starting early to reap the benefits.

 

A 25-year old who starts to save money sooner than usual, investing $75 per month by age 65 will accumulate more assets than if he/she had invested $100 per month at 35. This despite having invested less each month. A smaller amount of money over a longer time frame can have a greater impact than investing for a shorter time.

 

Securities investing involves risk and you could lose money.

2. Contribute to the 401(k),

If your employer has a traditional 401k plan, and you are eligible, you may be allowed to contribute pretax money. This can potentially give you a huge advantage. Let's say you are in the 12% tax bracket.

You plan to contribute $100 each pay period. Your take-home income will decrease by $88 since that money is taken out of your paycheck before any federal income taxes are applied. This includes the amounts of applicable state, local income tax, Social Security and Medicare tax.

This means that you can put more of your income into your investment portfolio without having to cut back on your monthly budget. You should also consider your retirement income to determine if a Roth option is available in your employer's plan. You still have options, even if your employer leaves.

 

3. Meet your employer's match

Greenberg advises that if your employer offers to match your contributions to your 401(k), make sure you contribute enough to fully take advantage of the match. An employer might offer to match half of employee contributions, up to 5% of your salary. Your employer will contribute $1,250 if you make $50,000 per year and contribute $2,500 towards your retirement plan. It's basically free money. It's not yours to lose.

 

4. Register for an IRA

To help you build your nest egg, consider opening an individual retirement account (IRA). There are two options. Traditional IRA Alternatively, you can choose a Roth IRA.

A traditional IRA might be the right choice for you, depending on your income and whether your spouse is eligible to participate in a company retirement plan. Traditional IRA contributions may be tax-deductible. Potential investment earnings can grow tax-deferred until retirement, which could make it tax-deductible.

You can withdraw up to 50% of your income if you meet the modified adjusted gross income thresholds. These limits are determined based on your federal tax filing status.  Roth IRAs are funded with after-tax donations. Qualified distributions, including potential earnings, are exempt from federal income taxes once you turn 59 1/2. If certain holding periods are met, they may also be exempt from state income taxes. Use Google Search to determine which type of IRA is best for you.

 

5. Catch-up contributions are available to those over 50

It's important that you start saving as soon as possible because yearly contributions to IRAs or 401(ks) plans are very limited. The good news is that you can go beyond the normal limits with IRAs and 401(k) plans. The good news?  Catch-up contributions to IRAs or 401(k) Catch-up contributions to IRAs or 401(k) are a great way to increase your retirement savings if you don't have the ability to save as much over time.

 

6. Automate your savings

Most people have heard the expression “pay yourself first.” and make your retirement contributions automatic every month to increase your chances of building your nest egg. There are plans that automate your investment selections each month and invests your money and assets in certain funds automatically.

 

7. Rein in spending

Check your budget. Consider bringing your lunch to work, or negotiating a lower car insurance rate.  Use Google Search for a Cash flow calculator This can help you to determine where your money is going. Find places where you can reduce your spending So you can save more or invest more.

 

Contribution rate: A little more can make a huge difference

The amount you contribute today to your retirement plan account can have a significant impact on how much you have when it comes time to retire. If you have a $50,000 salary, increasing your contribution rate to 4% to 6% can add $101,000 to your nest eggs over the next 30 years.

Securities investing involves risk and you could lose money.

This example is based upon a 7.2% return rate and is a hypothetical example and does not reflect the actual performance of any particular investment. Your results may vary. Actual investments include fees and expenses which may lead to lower returns than the hypothetical example.

 

8. Establish a goal

Understanding how much money you might need can not only help you understand why you are saving but can also make your savings more rewarding. You will feel satisfied as you work towards your retirement goal by setting benchmarks. Use a personal retirement calculator to help you plan your retirement and help you determine when you can retire and how much money you will need to save and invest,

 

9. Stash extra funds

Extra money? Spend it. Increase your contribution percentage every time you get a raise. At least half the money should be deposited to your retirement plan account.

It may be tempting to spend your tax refund or salary bonus on a designer bag or vacation. But, don't treat these extra funds like “found money.” Treat yourself to a small amount and then use the rest to make larger strides towards your retirement goals.

 

10. As you near retirement, consider delaying Social Security.

You can get more Social Security payments by delaying receiving them for as long as you live. You can start receiving Social Security retirement benefits at age 62. However, for every year that you wait (until age 70), you will see an increase in your monthly income. Even a one-year delay in your retirement could make a big difference and can increase your spouse's potential survivor benefits.  The first step is to recognize the need for money in retirement. Find creative ways to increase your retirement savings. Retirees often regret starting too late or saving too little. You can look forward to retirement by making the effort now.

 

This is our disclosure:  This summary is for informational purposes only. This summary is not intended to be a recommendation for or give advice for any company or individual.

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Nicole Jolie

Nicole Jolie brings you updated information on retirement including where to travel, health, investment trends and planning.  Whether you're a GenX'er, Baby Boomer or about to retire this site is for you.

 

This is our disclosure:  This summary is for informational purposes only. This summary is not intended to be a recommendation for or give advice for any company or individual.

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