There is no one way to boost retirement savings. No matter what your age, it is always a good idea to save and be proactive when it comes to your financial health. It’s never too early and it’s never too late to start saving! If you are nearing retirement or are about to enter retirement, there are a number of things that you can do, such as delaying your Social Security or dramatically increasing the amount of money you save, to ensure comfortable golden years. The truth is that the earlier you start saving, the better. Compound interest is no joke when it comes to things like retirement savings. Here are 10 tips to boost retirement savings.
- Control Your Spending and Budget
If you never want to outlive your money, you need to cut down on unnecessary spending and erroneous purchases. Things like that morning coffee, fast food, eating out at restaurants, and shopping sprees can add up over the course of a few decades. There are many online budget calculators and cash flow calculators that can help you in your quest to a comfortable retirement. Try recording every purchase you make this month. If you’re not usually in the habit of doing this, you may be surprised when you see how much you spend on nonessential items.
- Earn with Taxes in Mind
Most money that you save for retirement will be tax-deferred and not tax-free. What does this mean? When you go to withdraw money from the funds in your retirement plan, it means that these funds will be taxable upon withdrawal. This is why it is a good idea to earn a secondary means of income, such as a business or part time job, so you can defer taxes on your retirement plan for as long as possible. Which brings us to our next point…
- Stay Active with a Part Time Job
Grabbing a part-time job before you retire or during your retirement is a great way to stay active and keep you socially involved. Work can give your life more meaning and will keep you surrounded with other working people. Even if you don’t need the money, work often gives people a sense of purpose. Most people retire around the age of 65, this still means that you have decades of life ahead of you and a part-time job can fill your days with meaningful work and social connection.
- Hire a Financial Advisor
If you have a large retirement portfolio, you may need the help of a financial professional who can look at your situation with objective and unbiased eyes. Many people spend less time working on their portfolio in their later years, as they are more focused on their retirement and have less patience for matters of money. A great financial advisor can pay for their services many times over, as they can develop financial strategies to help maximize your investments.
- Calculate a Monthly Budget for Essentials
Calculating a monthly budget for essentials will give you an idea of how much spending money you can allocate during your retirement. Calculate just the essentials: rent, mortgage, car payments, food, toiletries, insurance, etc. Anything left over can be used for activities and purchases to fill the hours and make your retirement more meaningful.
- Save Extra Funds
If you’ve gotten a raise or have ran into a chunk of cash, consider increasing the contribution percentage to your retirement fund. Extra funds should be treated as small investments to your much larger goal of retirement. While it can be tempting to buy something new, thinking ahead is always the smarter option.
- Delay Social Security
You can begin collecting Social Security payments as early as age 62, however, you are not required to start collecting until you turn 70. Every year you wait, the monthly benefit will increase. A little patience means more money in the bank.
- Start Today
One of the biggest regrets of most retirees is not saving enough and starting too late. The best thing you can do to remedy this is to start today. Save those extra funds, delay social security, set a budget, cut nonessential spending, earn multiple sources of income, and consider a part time job.
- Contribute to the 401(k)
If your employer offers a 401(k) plan, it allows you to contribute pre-tax money towards your retirement. If your employer offers a match, then take full advantage of it! If you don’t, you’re leaving money on the table.
- Consider an IRA
An individual retirement account (IRA) may be right for you If you or your spouse do not already have a workplace retirement plan. The investment earnings have a chance to grow tax-deferred until you make withdrawals during retirement.
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