\Most of us enter the workforce right after college, if not earlier. It’s not until we start making real-world money that we even think about contributing to a retirement fund. In fact, most new professionals are automatically placed in their company’s 401k plan without understanding what it means.
As we get older, we start to understand the importance of saving for retirement. The downside is that we’ve lost some precious earning time. If you’re looking to get caught up with your retirement savings, I’ve got you covered! Check out 5 tricks to get caught up with your retirement saving and start feeling like you’ll be ready for retirement.
5 Tricks to Get Caught Up with Your Retirement Savings
#1 First, assess where you’re at
Here’s the thing about retirement savings – the earlier you start, the better off you’ll be come retirement time. Unfortunately, they don’t stress the importance of retirement savings until later in life. If you’re looking to get caught up with your retirement savings, start by assessing where you currently are.
Do you have anything saved for retirement? That’s a great start! If not, you’ll want to get started immediately. The easiest route is by investing in your company’s 401k plan, if they have one. Check out the article, Are You On Track to Retire, for a good guideline to follow around what you should have saved for retirement.
#2 Think about what you’ll need at retirement
As hard as it may be, especially if you’re young, you’ll want to think about what you’ll need at retirement. Do you plan on working during retirement? Maybe you want to travel? Maybe you’ll always want to be surrounded by kids and grandkids.
Determining what you think you’ll need at retirement will help you make the best savings decisions in the present. If you know your retirement will be luxurious, you’ll want to make sure you save a lot more than you would for a lazy retirement.
Remember, whatever you decide right now as it relates to your life at retirement, you can always change your mind. Give yourself permission to be flexible. Make decisions on your present retirement savings based on what you currently see your life in retirement looking like.
#3 Regularly increase your retirement contribution
One thing everyone can do to better their position for retirement is regularly increase their retirement contribution. Even if it’s going up by 1% per year, making the change to contribute more can help ensure you have more come retirement time.
Some companies have annual automatic increases – I suggest you sign up for that just in case you end up forgetting to manually increase your contribution. You can also wait until you get raises and increase your contribution based on your raise amounts. The point is to regularly increase your contributions, regardless of how you do it.
#4 Give your investment options a review
Check out the article, How I Picked My 401k Selections. After reading a personal finance book, I realized that I was not invested in the best things for my retirement plan. Most people are in this boat. If you don’t pick your investment options when you begin your 401k, you’re likely put in a single fund.
To get the most bang for your retirement buck, you’ll want to be invested in a variety of different options. Every retirement plan comes with investment options to choose from. Do your research and make sure you invest your money wisely. A good rule of thumb? The younger you are, the more invested in stocks you should be.
#5 Open additional retirement accounts and contribute regularly
If you really want to get caught up with your retirement savings, open additional retirement accounts. Traditional and ROTH IRAs are available to everyone. I’d recommend maxing out your 401k plan first (the contribution limits are higher), and then moving on to additional retirement vehicles.
If a 401k plan isn’t available to you, then you certainly want to put your money in an IRA. General investment accounts are also an option, but they don’t come with the same tax benefits as actual retirement plan accounts do.
One of the best things you can do for your future self is make sure you’re contributing as much as possible to your retirement accounts. It’s not always easy, but something…anything…is better than nothing! Are you on track with your retirement savings? Do you need to get caught up? Share your thoughts and questions in the Comments section below!