3 Tips for Boosting Your Retirement Savings
Do you feel like you’re behind on your retirement savings? You’re not alone. According to a recent study by the Economic Policy Institute, the average American between age 50 and 55 has just over $124,000 saved for retirement, while those between age 56 and 61 have more than $163,000.
However, those numbers may be skewed by households that have substantial assets. The median numbers tell a much different story. According to the same study, the median retirement savings for families between age 50 and 55 is $8,000, and the median for those between age 56 and 61 is $17,000.1
The good news is that even if you are behind, you can take action to catch up. Some simple changes in behavior could be enough to boost your savings and put you in a better position to enjoy a stable and comfortable retirement. Below are three steps you can take to boost your savings, starting now:
1.) Write down your goals
It’s always easier to implement a plan after you’ve put it in writing. The act of writing down your goals and objectives could solidify them in your mind and make them feel more real. It also may clarify the challenges you face as you prepare for retirement.
Start by estimating your projected spending level in retirement. You could base it off your current spending, or you might create a detailed budget. Make sure you account for inflation, which will gradually drive up your expenses throughout your retirement.
Once you’ve estimated your spending, compare it with your projected retirement income, such as Social Security benefits and pension payments. If there’s a gap between your income and your expenses, you’ll need to fill it with distributions from your savings.
This process at least gives you a savings target, which should help you identify how much you need to save each year to meet your goal. With that information in hand, you can implement a strategy.
2.) Automate your contributions
Do you find yourself skipping contributions to your IRA or other accounts because you need the money for more urgent expenses? It’s easy to feel like a home repair, a medical emergency or even a vacation is more important than a retirement contribution. If you delay or skip contributions for too long, however, you could seriously impact your retirement balance.
Instead, automate your contributions. Set them up to automatically come out of your paycheck and transfer into your IRA, Bank On Yourself plan, and other accounts. By automating your contributions, you may be less inclined to skip or delay them in the future.
3.) Cut back on expenses
If you’re like most people, you probably have some unnecessary expenses in your budget. Analyze your spending and look for areas to cut back. You could take less expensive vacations, trim your cellphone bill or even reduce your dining out activity.
Of course, the key is to then allocate those savings toward retirement. Even a modest increase in your savings rate could have big results if your increased savings are compounded over time.
Ready to develop your retirement savings strategy? Let’s talk about it. Contact us today, and learn how we can help you develop and implement a plan that’s right for you!
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