Whatever your current stage in life, here are some tips that will help you boost your retirement savings and be able to do all the things you want to when you retire.
Have you started saving for your retirement yet? Whether you’ve just started or are getting near to your retirement date, there are things you can do to grow your nest egg and make retirement more comfortable. The earlier you start saving for retirement, the better and focus on saving as much as you can. However, even if you leave it until the last minute, you can take certain steps to increase your retirement savings. Whatever your current stage in life, here are some tips that will help you boost your savings and be able to do all the things you want to when you retire.Tips that will help you boost your retirement savings.Click To Tweet
Take Advantage of a Workplace Savings Plan
Many employers offer workplace savings plans, such as a 401(k), 403(b), or 457 plan. Sign up and contribute as much as you can. One of the benefits of this type of saving plan is that you don’t have to pay taxes on the earning generated until you start taking distributions. Your contributions benefit from tax-deferred compounded growth.
Your employer may match your contributions so try to contribute enough to earn the maximum match. In effect, this means you’re getting a 100% return in the first year. However much you can afford, start as soon as possible because anything is better than nothing.
Establish an IRA
It is possible to contribute to a workplace savings plan and save in an IRA. Up to $5,500 can be contributed together with an additional $1,000 catch-up if you’re aged 50 or over. There are two types of IRA, Traditional IRAs, and Roth IRAs. A Traditional IRA is made using contributions of after-tax dollars and may be tax deductible. Roth IRAs are also made up of after-tax contributions but are never tax-deductible.
Take Advantage of Catch-Up Contributions
Contributions to IRAs and 401(k) plans are limited. This is why it’s important to start saving as soon as possible. However, when you reach the age of 50, it is possible to play catch up. This means you can go above the usual limits. If, over the years, you haven’t been able to save as much as you wanted you can catch-up your contributions and increase your retirement savings.
Pare Back Your Spending
If you want to boost your retirement savings a good way to do it is to cut back on your spending. Finding a good rate for your car insurance, saving energy whenever possible, shopping for groceries sensibly and not wasting water will all mean you’ve got more money left at the end of the month to boost your savings. If you’re spending several hundred dollars on restaurant meals, it’s time you started cooking at home more often. How often do you use that expensive gym membership? Cancel it, and you’ll be freeing up a few hundred extra dollars.
Invest in Property
Real estate is a good investment to make. There are many people who will attest to its worth because they have been able to secure a comfortable lifestyle thanks to a portfolio of real estate. That doesn’t mean it’s all a bed of roses and there are many people who have lost it all. Investing in real estate takes knowledge, skills, intuition, and guts. An experienced company such as Turner Investment Corporation will also help. Find out more info here.
Defer Social Security Payments
Did you realize you can delay receiving social security payments before you reach the age of 70? The earliest you can receive social security payments is 62. If you’re able to wait a few more years, for example until you’re 70, the amount of your monthly benefit will increase. Even if you only push your retirement back one year, it will significantly boost your Social Security income.
Set a Goal
Have you thought about how much you’ll need when you retire or are you just saving as much as you can in the hope that it’ll be enough? Knowing how much you need will make saving and investing much easier. It will also make it more rewarding. As well as determining the final goal, set yourself benchmarks along the way.
Calculating how much you need for retirement depends on the level of comfort you want to achieve. The easiest way to come up with a figure is to base it on your current income. There are many financial experts that will recommend you aim for a figure that’s between 70% and 85% of your income before you retire.
This kind of calculation is OK if you’re nearing retirement. For younger people who have an entry-level salary, it’s not very useful. Another problem with basing your calculations on your pre-retirement income is that it assumes you regularly spend most of your income. Whereas, many people don’t actually spend the bulk of what they make.
It is far better to focus on your spending as it addresses both of the problems mentioned above. However, it does raise another issue. Your spending in retirement is going to be different. One of those differences may be that you no longer have a mortgage to pay. You will no longer need to support your children, as they have all left home. There may also be several expenses you weren’t paying when you were working, such as medical costs and out-of-pocket expenses. Many of the tasks around the home you would have done yourself will have to be outsourced and paid for. Many retirees choose to travel a lot which will further increase your expenditure.
What Happens if You Start Saving Later?
If you start saving much later in life, it’s no reason to despair. The best way to compensate is to contribute as aggressively as possible. You must save more and save harder. However, don’t take that as meaning you have to take more risks to try to make up for lost time. Choosing riskier investments to compensate for lost years of saving means is tempting fate. It will be far better to look for low-fee index funds and spread your investments in various ways.