The New Year means a new start, and with it comes the opportunity to reflect on resolutions you want to make for yourself. Notably, one important goal that many people have is saving more money for their retirement. However, improving your retirement savings can be as easy as making minor adjustments in your daily life.
In this blog post, you will learn about five effortless ways you can increase your retirement savings in 2021.
Start Today Regardless of Your Age
Start investing in your future today. The sooner you start, the more time your retirement funds will have to grow and compound. Start by making an effortless change like contributing just a little bit of extra money every month or participating in payroll deduction plans that automatically move cash into long-term investments for you – it’s so easy!
Be sure to sign up for a free account on the Retirement Dashboard and find out how much you need to save each month to achieve your retirement goal. The dashboard will also show your expected monthly withdrawals, estimated social security income, expected tax deductions, and more – all based on some simple inputs from you. Create an account today!
Contribute to Your 401(k)
The average 401(k) contribution in the U.S is only about $2100, which can be a lot of money over time if you start saving early and keep up your contributions! In addition, if your employer provides matching funds on top of that amount (which most do), it’s straightforward to build wealth for retirement by making minor changes to your paycheck plan.
Gather up the paperwork, fill out a 401(k) enrollment form and then elect to have some of every paycheck automatically transferred into your retirement account. For example, if you contribute $200 per month ($2400/year), an employer match will grow that by about 50% over 20 years. Consider adding even more to your savings by setting up an automatic monthly transfer from your checking account to contribute a certain amount.
Your employer will also be saving money on payroll taxes if the 401(k) is matched with pre-tax contributions, which benefits both of you! Plus, any interest earned will have been federally insured for 25 years and compounded over time.
Open an IRA
An IRA is a retirement account designed to be used in conjunction with other tax-advantaged accounts like 401(k)s and 403(b)s. It is also known as the Individual Retirement Account, or ROTH IRAs, which are especially great for retirees who want to withdraw money without paying the penalty.
It’s not too late to open up an IRA for this year, and the amount you contribute can be as much as $5500. If you’re interested in opening one up, talk to your employer about a contribution-matching program offered. When they match what you put into the account with their own money, it doubles how much you get to invest.
You can also open an IRA on your own, and the contribution limit is $5500 per year as well. Once you start contributing to a traditional IRA for six months or more consecutively (meaning that it’s not part of just one year), then those contributions are eligible for tax deductions in the following years. For instance, Accuplan for real estate in your IRA is a great choice you might consider.
Automate Your Savings
Automating your savings is one of the easiest ways to start saving for retirement. You can automate small amounts, like $50 a month, or you could set it up to withdraw large sums from your paycheck each payday. Setting up automated withdrawals with an online bank account and syncing them with payroll takes only minutes-especially if your employer provides an automatic deposit function.
Using online banking to automate your savings also has the added benefit of making it easier for you to track and monitor your progress towards retirement. And, if anything goes wrong with a transfer or withdrawal, often you have access to customer service right there on the website.
Delay Your Social Security as You Get Closer to Retiring
Some people may decide to delay their social security as they get closer to retiring. There are a few reasons for this, but the most important one is that delaying your retirement will increase monthly payments from between $30-$70 per month on average. This means you’ll have more money in retirement if you wait until age 70 before taking it than if you take it at age 62.
If the person is financially stable enough, they can wait until their full retirement age to receive payments from social security. This will provide a larger monthly payment than waiting to start taking benefits early (between 12 and 14 years before reaching your full retirement age). This strategy could benefit those who want to put off their retirement for another decade or two.
As you can see, there are many simple things that each person can do to make their retirement savings grow larger and thus create more for themselves in the future when they stop work. Generally, it’s worth investing just a bit of time now to ensure that your financial security is guaranteed later on. Try these five tips in 2021, and you’ll see a difference.