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June 10, 2024

Saving for Retirement: 5 Ways to Boost Your Savings

Almost half of Americans ages 55 to 66 have no savings for retirement. These statistics should be a lesson to younger generations that still have time to make a plan. 

If you are worried about having enough money in the future rest assured that you have many options. 

Read on to find 5 ways to start saving for retirement now. 

1. Start Saving Now

No matter your age, using these retirement savings tips as soon as possible will only boost your bank account by the time you retire. This is because you can utilize the compounding interest on your savings. So, the longer your money sits untouched, the more money you will earn. 

Even if you are only putting aside small amounts, they can make a huge impact 30 or more years from now. This is the easiest way to become worry-free as you approach retirement age. 

Therefore, do not wait another day to make a plan and start a savings account. If you have income then you have a way to invest in your future. 

2. Utilize Your 401(k)

A great way to start your retirement savings is to utilize a 401(k). This type of retirement account is through your employer. Ask your Human Resources representative about your 401(k). And if your job does not offer one, for example, if you only work part-time or on a contract, then consider finding one that does. 

Having an employer with this benefit will help you save money directly from your paycheck. It is also tax-free so the money will be deducted from each payment before taxes being taken out. This means that you will have less money taken out of your paycheck but still get the full amount placed in your 401(k).

For example, if you have 12% federal income tax taken out of your paycheck and you want to put $100 in your 401(k) each pay period then you will only have $88 less on each paycheck, not $100. This is the smart way to stash away money. 

Another great benefit is that you can bring your 401(k) with you if you leave your job. And if you get another one at your next employer you can combine the accounts or rollover your old one into an IRA (individual retirement account) so you can keep contributing. Plus, IRA contributions are tax deductible since you are paying post-tax. 

Lastly, ensure that you are contributing enough to your 401(k) to gain the benefit of employer matching programs. This means your company will contribute to your savings at a percentage of your own contribution, which is free money. 

3. Create Automated Savings

One of the best investment ideas is to set up an automated deduction for your retirement savings. Whether you deduct money from your paycheck for your 401(k), have money deposited into your IRA, or transfer to a bank savings account, it makes it easy when you set an amount and have it done for you. 

You can also choose your deduction period. For example, your 401(k) could be biweekly with each paycheck. Then your regular savings account could deduct a designated amount each month. 

With automation, you can set it up and forget about it. This makes it easier to leave your savings alone. You do not want to think about them as expendable income. 

If you do take out your savings early from 401(k)s or IRAs then you will pay a tax penalty. Avoid this at all costs by creating an emergency savings account. This account is separate from your retirement savings and can be used without any financial consequences. Think of this account as extra money for car repairs, home maintenance, or medical emergencies. 

4. Develop a Budget

All of these methods will not work if you do not have a savings budget. With no budget, you are guessing how much you can afford to put away. This might lead to running out of money for necessities and cause you to take out retirement money early, which is costly. 

Instead, make a spreadsheet of your expenses and income to determine your net profit. Be sure to include daily, weekly, monthly, and yearly expenses as well as a leisure category for entertainment. Also, include an emergency fund that is separate from your retirement savings. 

Once you see how much you can contribute to your savings then divide this between your accounts. 

Stick to this budget by maintaining your spending within a range that does not go over the allotted amount. You do not want to deplete all of your money each month, so spending less one month can roll over into the next one. 

Lastly, set a goal on how much you want to save each month. By adjusting your spending or increasing your income you can come closer to this goal.

5. Make Investments

Saving accounts are not the only way to ensure you have enough money for retirement. The benefits of investing your money are that you can make plans for long-term income in lump sums. 

Some investment options include real estate as you gain equity in your property or other investing in alternatives like hedge funds, mutual funds, corporate bonds, and individual stocks that have the potential to make large profits. However, be aware of the risks involved in investments as there are no guarantees. Only invest what you can afford to lose. 

Saving for Retirement Offers Peace of Mind

Worrying about your future should not impede how you live your life. Luckily, by saving for retirement now, you can avoid the anxiety of insecurity. Plus, saving accounts and smart investments can be set up and then left alone, taking little time and effort. 

Visit our Finance section for more money-saving tips. 

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