Retirement seems like a lifetime away for young professionals. But as careers advance, families are started and milestones are met, retirement can start to feel a lot closer.
A 2014 Gallup poll indicates that most Americans now retire at age 62. That is a good starting point when planning your retirement.
The earlier you start establishing savings goals and putting plans in motion, the more likely you will be to retire on time without having to worry about money. These strategies can help you save more for retirement years.
1. Raise? What raise? If you’re lucky enough to get a salary increase at work, direct the extra money into retirement savings accounts and act like the raise never happened. You won’t miss the extra money since you were not accustomed to earning it, and redirecting it into retirement savings can go a long way toward procuring your financial future.
2. Max out deposit limits. By depositing the maximum allowable amount into your retirement accounts each year, you can grow your retirement savings quickly and earn considerably more interest on your money over the life of the account.
3. Allocate your tax refund. Elect to apply your tax refund to a traditional IRA or Roth IRA.
4. Take advantage of employers’ offers to match retirement contributions. Many employers will match 401 (k) contributions if you save enough to qualify. This is an easy way to save without having to put in any extra money out of your own pocket. Make sure you’re vested in the 401 (k) plan so that the employer contributions can be taken with you if you leave a job.
5. Open a Roth IRA. A Roth IRA is a retirement savings vehicle that enables you to pay taxes on the money you put in up front. When you become eligible to withdraw the funds (after age 591/2), they are tax-free.
6. Aim for a 15 percent investment. Start investing 15 percent of gross income for retirement once you’re debt free and have a fully funded emergency fund. Such a strategy can go a long way toward ensuring you have enough money to do what you want throughout retirement.
7. Make calculated cuts. Think about which items you can live without and dedicate what you would spend on those expenditures to retirement. For example, calculate the difference between buying a new car and a certified pre-owned model. Deposit the savings into retirement. Can you skip a vacation this year and do a staycation instead? Forgoing certain luxuries can help you build retirement savings.
Saving for retirement becomes a little easier with strategies that can make money go further.