Almost every American, no matter how far they are from retirement, will think about saving for retirement at some point in their life. If you are thinking about retirement savings, you may be wondering if there is any way to boost those savings.
There are definitely ways to go about boosting your retirement savings! Some are very simple, while others are a little more complicated but have higher return. Here are the different approaches that can be used to boost retirement savings.
Some Simple, Hands-Off Approaches to Boost Your Retirement Savings
There are some basic ways in which you can add to your retirement savings. Oftentimes, these methods are helpful for those who are further from retirement:
- Start Saving as Early as You Can—This approach is very straightforward. No matter what route you decide to take with retirement, starting as soon as possible will have huge benefits when it comes time to retire.
- Take Advantage of Employee Retirement Benefits—There many companies out there who have several retirement benefits for their employees. Things like matching contributions to a 401k plan, financial assistance programs, etc. It is important to know about these benefits and take advantage of them as early as you can.
Ways to Boost Your Retirement Savings that Involve a More Hands-On Approach
Here are some ways to boost your retirement savings with a more involved approach. These options may be a little bit more complicated—they involve investments and a few monetary strategies:
- Open an IRA—An IRA is similar to a 401k plan, but instead of having an employer set this up, the person retiring has to set up their IRA. An IRA is set up through an independent financial institution. There are generally three types of IRAs out there:
- Traditional IRA—Having a traditional IRA means your income is not taxed until it is withdrawn in the future. Ideally, this money is kept in the account until you retire and get the benefit of the lower tax bracket for retirees.
- Roth IRA—A Roth IRA is where you add money to the account after you have already paid taxes on that amount. That way, when you finally retire and access that account, all of those savings are tax free.
- Rollover IRA—These are accounts for savings that have been “rolled over” from previous savings accounts. For example, if you leave your job, the 401K savings can be rolled over to one of these accounts.
- Set up Automatic Savings—This is a very simple way to boost your retirement savings but does require you to set it up yourself. By having automatic payments from your bank account sent to your savings or some type of retirement account, you don’t have to think about the money that you are putting away. Over-time, this can add up to quite a bit of money.
- Look in IRA CDs—These are CDs (Certificates of Deposit) specifically designed for retirement investing and can be a great place store your money because earnings are tax-free.
- Cut Down Costs—Although this may seem simple, cutting down on expenses does require some work. Cutting down those extra, unnecessary costs are another way to have extra savings for retirement. Try and find ways to save more both on a small and large scale.
- Speak to a Financial Coach—A financial coach is someone who helps people organize, manage, and optimize their finances. When it comes to retirement, financial coaches can help you with long-term or short-term goals for retirement, and even help you figure out the best way to invest your money.
How Can I Boost My Retirement Savings If I am Over 50?
If you are older than fifty, and just starting to plan for your retirement, you may have some questions regarding what you can do to make the most out of your income or savings.
Here are some steps that people over fifty can take:
- Increase Your Social Security by Waiting to Retire—For every year that you postpone retiring until the age of seventy, you can make more income. This can be a huge benefit and may be worth working those extra couple of years if you can do so.
- Take Advantage of Catch-Up Contributions—Once you hit age 50, you can contribute more than you could have into either a 401k or an IRA. Whether you have saved from an earlier age or not, this is another way that can really help secure savings for retirement.
- Find Other Ways to Make Income—When retiring, you won’t have your major source of income. It might be a good time to see if any of your hobbies are profitable.
- Get Rid of as Much Debt as Possible—By eliminating debt before retiring, you ensure that all of your income after retiring can be used when you need it.
Having savings for retirement is extremely important, and this is especially true if you want to continue living the lifestyle you had before hitting that milestone.
When it comes to boosting your retirement savings, the earlier the better, and there are several ways to do so. Something as simple as cutting unnecessary costs, to something as complicated as setting up an IRA, can all help you boost your retirement savings!