Are You Prepared? 6 Powerful Ways to Maximize Retirement Savings
It doesn’t matter whether you’re 35, or 55, retirement should be an important consideration in your search for financial freedom.
At the end of the day, it’s easy to put off the idea of retirement as something you can think about “later”, when you’re still young. However, the truth is that everyone’s going to face retirement at some point – either out of choice or necessity. The best way to take advantage of the situation is to ensure you’re on track for a comfortable journey through your golden years.
Whether you want to make sure that you’re taking the right steps for success, or you’re just starting to think about retirement for the first time, the following tips should help you to get more out of your retirement strategy.
1. Get to Know Your Options Early
Sometimes, the process for maximizing your retirement savings can be as simple as just understanding what your choices are when it comes to investments.
If you’re just starting to put money away from retirement, thinking about how you can get the most out of your money now could be a great way to prepare yourself for the future.
If you need to, speak to a financial advisor about your options, and think carefully about how “prepared” you want to be when you hit your 60s.
2. Give More to Your 401k
Most employers offer a traditional 401k plan that allows you to contribute pre-tax cash into your savings. This can be incredibly useful for some people.
For instance, say you’re in the 15% tax bracket, and you contribute around $50 per month. Since the money comes out of your pay check before your taxes are assessed, your take home pay will only be reduced by around $85.
In other words, you can invest more of your income without using as much of your monthly budget.
At the same time, remember that if your workplace offers a company match policy, you should contribute up to the point that your business kicks in. This will basically give you access to free money for your future.
3. Don’t Forget Your Health Savings Account
As the costs of healthcare continue to grow, the health savings account, or HSA could be a powerful retirement planning opportunity. This resource not only helps you to pay for healthcare expenses, but it could also give you an opportunity to save away extra funds for your retirement. The contributions you make are 100% tax deductible, and the funds that aren’t used for medical expenses can be continually invested and grown over time.
4. Make Saving Automatic
If you’ve ever heard the phrase “Pay yourself first”, then you’ll know how important it is to focus on growing your nest egg and protecting your future.
The best way to make sure that you’re safe for the future, without having to think too much about it, is to make your retirement contributions a natural occurrence each month.
Some regular contribution setups will allow you to automate the funds that go into your retirement solution each month, so you can basically just set and forget your retirement plan.
5. Set Goals for Your Future
Knowing how much you need to live comfortably in your later years can make the process of saving and investing much easier and more rewarding too. If you can, think about setting goals and benchmarks along the way to success, so you can give yourself a pat on the back every time you move a little closer to your retirement goal.
If you need to speak to a financial professional about the age at which you might be able to retire, and how much you’re going to need to invest to do so.
6. Put Extra Funds Aside Whenever You Can
If you have extra money available, don’t just spend it. Instead, every time you get a raise at work, or you find yourself with more cash in your budget, think about dedicating about 50% of that new money into your retirement fund.
While it’s always tempting to take extra salary bonuses and splurge on new big-ticket items for you and your family, it’s usually a much better idea to ensure that you’re prepared for the future.
7. Delay Social Security as You Get Closer to Retirement
Last, but not least, remember that every year you can delay receiving your social security payment before you reach age 70, is another increase to the amount you receive in the future.
Age 62 will be the first time you can start receiving your social security retirement benefits, and for each year you wait, your monthly benefit will increase.
All that additional income quickly adds up, meaning that you have more money to fall back on when you’re retired.
Recognizing the Need for Retirement Planning
Ultimately, the first step towards success with your retirement plan is recognizing the need to start saving with a strategy in place.
Understanding how much money you need to gather for a comfortable retirement, and finding creative ways to boost your contributions could go a long way to giving you the peace of mind you need in your older years.