Saving for retirement is an absolute must for women of any age. Obviously, men too, but I’m focused on the ladies! Retirement is the time where you hang up your work medals and focus the last portion of your life on doing what you want. Guess what? That will take money. That’s why saving for retirement is so important. The next important piece is finding ways to boost your retirement savings.
Let’s say you did start saving for retirement early, or you started late but want to give your retirement account a lift as quickly as possible. I’m sharing 5 ways to boost your retirement savings. You’ll want to get the most bang for your buck with your retirement savings, so these tips will come in handy!
Why You Should Be Saving for Retirement…Like, Yesterday
Okay, ladies. This should come as no surprise to you, but the earlier you start saving for retirement, the more you will have when it’s time to retire. I truly believe this is one of the most important reasons to start saving for retirement as soon as you possibly can. Thanks to compounding interest, your money grows on top of itself. The more time you have for your money to grow, the more opportunity your money has to triple, quadruple, and more!
You may remember this example from the article 8 Ways to Set Yourself Up for Financial Success. It’s the best example to show the power of saving for retirement early, so I’m sharing it here too!
As you can see in the chart, the person who starts saving $300/month at age 25 will have almost 10 times more than if they had waited until they were 45 to start saving $300/month! These numbers are based on the historical growth rate. The numbers don’t lie! Clearly, if you start saving for retirement as soon as possible, you will undoubtedly have more for retirement.
5 Ways to Boost Your Retirement Savings
#1 Up your contribution by 1% automatically
The easiest way to boost your retirement savings is by upping your contribution amount. Usually, your 401k contribution is based on a percentage of your income. Give your 401k plan a boost by increasing your contribution by 1% right now. On one side, the number is so small that you won’t notice a big difference in your check. On the other side, the number will make a difference over time for growing your retirement amount.
If you think you can’t afford to increase your contribution amount, I challenge you to look at your budget and spending. I’m sure there is an expense or excess spending that can be reduced to help you make up the 1%. Trust me, the small change will have huge impacts on your future.
#2 Maximize your investments
My retirement plan did a completely flip when I took the time to research my investments. First off, diversifying my portfolio helped keep my balance from drastically shifting. Secondly, I spread my contribution over a variety of investments. This instantly resulted in dramatic growth…just from investing in a variety of stocks! Read How I Picked my 401k Investments for more details!
#3 Open an IRA and start contributing
When clients tell me that their employer doesn’t offer a 401k plan, I instantly ask them if they contribute to an IRA. Nine times out of ten, the answer is no. An IRA is a great alternative to saving for retirement when you don’t have the option to do so through your employer. This is an absolute necessity if you don’t have the option of a 401k plan.
While you should have an IRA when there isn’t a 401k option available, you can also have an IRA as an extra way to save for retirement. Even if you have a 401k plan through your employer, you can contribute to an IRA on your own! The IRS implements an annual contribution limit of $5,500 into an IRA. Having that extra savings specifically for retirement time is a great way to boost your retirement savings and ensure you have more than enough.
#4 Take advantage of the full company match (if possible)
When it comes to employee benefits offered by employers, 401k contribution matching is usually on the list. For example, your company may match all 401k contributions up to 5%. This means that if you contribute 5% to your retirement plan, your company will match you 5%. Do the math. That means you are saving 10% for retirement.
How awesome is that?! The only catch is that you need to do your part and contribute the 5%. If you decide to only contribute 3%, then your employer will only contribute 3%. That means you are losing out on an extra 4% savings! You are leaving money behind by not taking advantage of your full company match. Do whatever you need to do to find the money in your budget. The worse thing you can do is leave money on the table.
#5 Plan to save more as you make more
As one of the 7 things to do when you get a raise, automatically increasing your contribution percentage when you make more helps you long term. You are already used to life before the raise, so why shouldn’t a portion of it go towards your retirement? You won’t miss the money, because you never had it to begin with! As you grow in your career, make it a point to always save more for retirement when you make more.
Determine if You’re on Track to Retire
You know what you can do to boost your retirement savings, but how do you know if you are on track to retire when you want? Here’s a good rule of thumb to follow: By the time you are 30 years old, you will want to have the equivalent of one year’s worth of salary. Keep in mind, the salary amount is determined by the amount of money you were making when you actually started saving for retirement.
By 30, you want 1x your salary saved.
By 35, you want 2x your salary saved.
By 40, you want 3x your salary saved.
By 45, you want 4x your salary saved.
By 50, you want 6x your salary saved.
By 67 (retirement age), you want 10x your salary saved.
Keep in mind that these numbers could vary by person. If someone plans on having multiple properties, will run a business, or may have extensive debt throughout their life, then they may want to have more saved for retirement. If you plan on having your house paid off before retirement, and don’t need much to live on, then the rule of thumb above is a great path to follow.
Book a free consultation with me! I help clients maximize their 401k, 403b and IRA investments to ensure they are getting the best bang for their buck!
Related: 8 Money Moves to Help You Retire Early
You can’t get away from saving for retirement, so you may as well make the most of it! The tips above can help you give your retirement savings a boost! When the time to retire comes, the last thing you want is to worry about money. Do your part now and you’ll be forever grateful to your future self! What tips can you share about saving for retirement? Have you implemented any of the tips above? Post a comment below to share!