Do you have enough money stashed away for retirement? As you move through different life seasons, it’s smart to take stock of your financial picture. You may want to reallocate investments or put more toward retirement savings.
Keep reading to learn 7 key tips that can help you boost retirement savings!
- Put Money in a 401(k) Plan
Does your employer offer a retirement plan? If so, take advantage of it. With 401(k) or 403(b) plans, you can contribute a portion of your paycheck to a tax-advantaged fund.
A retirement plan will be set up by an employer. Remember that this is money intended to grow over the long term. As a result, it’s a good practice to include a blend of equities and bonds to create a diversified portfolio.
Talk with your human resources manager to set up a 401(k) account and determine investment allocations. As your income grows, contribute a larger percentage to your retirement savings. Just be sure to check your account every quarter to assess its progress.
- Take Advantage of Employer Matches
Make sure you’re matching employer contributions to your retirement account, too. Think of it as free money! If your employer offers a 4% match, for instance, that means they will contribute 4% of your income if you contribute 4%.
In total, that would be 8% of your income going into savings. So you’ll get twice as much money going into your account. Then when you factor in compound interest, it’s an easy way to grow your account!
- Do Automatic Contributions to Start Saving
Have you set up autopay options with car payments or credit cards? If automating bill payments has made your life easier, you can do the same with your approach to retirement savings.
With your employer, you can set up a direct payment to a retirement plan. Additionally, you can set up recurring payments to other investment sites. This is a good financial strategy to ensure that you’re not spending all of your income.
If you have a brokerage account, for instance, divert $100 to it each month. With mutual funds and ETFs, you can grow your investment through compound interest. This is a great way to build wealth while keeping money accessible.
- Take Advantage of Contribution Changes Over 50
When you hit the age of 50, you’ll gain the ability to increase your savings. When you’re under the age of 50, you have limits on how much you can contribute to an IRA each year. But when you’re over 50, you can contribute more money to IRAs.
Contribution limits for IRAs or other accounts may change each year. Be sure to check the numbers each year. And know that you’ll need to contribute the income you earn from working for others or being self-employed.
You’ll also have the ability to put more in your retirement account, too. If you have a spouse with a good income, consider maxing out your contributions to speed up growth. If you got off to a slower start investing, you can start to catch up as you change life seasons and hit mid-life.
- Look into Roth IRAs
With IRAs, you can get a personal tax-advantaged retirement savings plan. Check out both traditional and Roth IRAs to find the right option for your situation. And to open an individual retirement account, visit https://www.farmersbankidaho.com/ for help.
With traditional IRAs, you defer taxes until you hit retirement. As you’ve passed through life seasons to that point, you may be in a lower tax bracket and owe less.
With Roth IRAs, you’ll pay taxes on the front end. This means that you should be able to avoid taxes when it is time to take out money in retirement.
- Reevaluate Your Budget at Different Life Seasons
To start saving, you need to pare down your expenses. The easiest way to do this is by setting up a budget. You can track expenses throughout the month to see how you’re using your money.
Use an app or spreadsheet and make sure that your partner is onboard with the process. Account for student loan payments, mortgages, utilities, and other expenses as you map it out. See where you stand with savings, and where you can cut expenses.
Make a goal of putting as much as you can into savings — especially when you’re younger. Cut out on a streaming service or limit how often you eat at restaurants. Look into carpooling and secondhand clothing as other ways to put more income into savings.
- Use a Health Savings Account in Your Financial Strategy
With high deductible health plans on the rise, you may have access to a health savings account (HSA). There are a few key benefits that come with having an HSA as you move through new life seasons.
For starters, what money you contribute is tax deductible. And you can contribute more money that will grow over time. If you need money for health care costs down the road, you’ll have a designated fund for it.
And better yet, when you hit the age of 65, you can use the money to do just about anything. Think of your HSA as another place you can stash money to help you in retirement.
Find the Best Financial Strategy
As life seasons come and go, keep tabs on your financial picture. While you might have made more aggressive investment choices in your younger years, you may need to ease up later. You’ll always benefit from cinching in spending habits and maintaining a budget.
For more strategies to build retirement savings, check back for new and informative articles!
February 23, 2021
October 4, 2021
September 14, 2021