When money’s tight, your retirement savings is usually the first place you cut back. Or maybe you just didn’t get around to saving as soon as you should have. Whatever the reason, you may feel the pressure to ramp up your savings in time for retirement. Here are a few ways to make sure you have enough money to retire:
1. Postpone your retirement. While it may not seem ideal, retiring later will give you the extra time you need to save. Not only will you have more time to build a larger retirement portfolio, you’ll also shorten the amount of time you have to rely on your savings once you stop working. There may be other advantages to postponing your retirement as well. By waiting to receive your Social Security benefits, your annual payments increase every year until age 70. You may also want to consider working part-time once you’re retired to fill any gaps you may have.
2. Max out your retirement savings plans. When it comes to retirement savings plans, it’s important to know your limits. Contribute the maximum amount possible to your 401(k) and other retirement savings plans, especially if your company provides matching contributions. If you are 50 or older, you can make catch-up contributions to the tune of an additional $6,500 for your 401(k) and an additional $1,000 for your traditional or Roth IRA. Note that catch-up contributions are due when your taxes are due (excluding extensions) and not the end of the calendar year.
3. Make saving a priority. It can be difficult to find the money to put towards your retirement. Find more ways to contribute to your savings by creating a budget and sticking to it. You can also increase your income by picking up some extra work, cutting back on your expenses and reducing the amount of debt you have. Small savings add up, but pay close attention to big-ticket items as well, such as your insurance, mortgage and transportation costs. Remember that everything is negotiable, so you may be able to refinance a loan or shop around for a better deal.
4. Rethink your investment strategy. Across the board, people tend to invest more conservatively, especially as they get closer to retirement age. But you may not be able to afford to invest that way. Talk to your financial advisor about investing more aggressively based on your personal risk tolerance. To help reach your retirement goals, you can allocate more money to stocks that have the potential for higher returns. While the higher risk may seem intimidating, investing too conservatively may mean that your account can’t keep up with inflation. Help minimize risk by always keeping a well-balanced and diversified portfolio.
When it comes to catching up on your retirement savings, forget the past and get started today. It’s never too late to create a financially secure future.
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