To ensure your retirement savings don’t dry up, it’s important to follow proven methods that can safeguard and grow your funds. Well-managed retirement savings are essential for achieving a secure, comfortable, and fulfilling retirement. By implementing these strategies, you can help secure a comfortable and financially stable retirement.
1. Take Advantage of 401k Offerings
If your company offers any 401k benefits, this is a great way to save money for retirement. Whenever making contributions into a 401k, the money that you contribute is pre-tax dollars and also grows tax-free. On top of that, if a company match is offered you can benefit from FREE, tax-free money. While some employer sponsored 401ks can not be the best and may have high fees, if they offer a company match it is still worth investing.
2. Utilize a Roth IRA
Roth IRAs are another great way to save for retirement because of tax advantages. While it doesn’t allow you to contribute pre-tax money into the account, it DOES let your money grow tax-free. Many people will use both a 401k and Roth IRA simultaneously. Once their 401k is maxed out, they will contribute money into an IRA to boost their retirement nest egg.
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3. Maximize Contributions
If you’re taking advantage of tax-advantaged accounts like a 401k or IRA, you should aim to maximize your contributions to these accounts. The IRS puts limits on your contributions each year. Not everyone can afford to max out their retirement savings, but contribute as much as you can. Overtime, you can increase your contributions as your salary increases.
4. Fund Your Retirement Accounts with Side Hustles
Side hustles can be an excellent way to make money. Instead of using this cash to purchase a new car or upgrade your appliances, consider using it to fund your retirement accounts. If you haven’t maxed out your IRA contribution, this would be a great option. Whether you are flipping furniture, using a 3D printer to make money, or completing freelance gigs, using side hustles to save money for retirement can be a great way to save money and jump start your retirement investments.
5. Ditch the Lavish Vacations
Do you take an annual vacation to the beach or your favorite destination? Consider taking a year break from your lavish vacation and use your savings to invest extra in your retirement plans. While $2,000 a year might seem like an innocent amount considering all of your hard work, this can expedite your retirement savings goals and perhaps allow you to retire early!
6. Limit Your Monthly Expenses
Both your income and expenses determine the amount you’ll need to save for retirement. And it’s quite simple: by lowering your expenses, you’ll need to save less for your retirement. One of the best methods of lowering your monthly expenses is by decreasing your housing costs. Because your home will often account for the largest portion of your budget, even a small adjustment could save you thousands per year.
7. Invest Early
Younger people have a huge advantage when it comes to growing money. Time. The longer you have to grow your money, the longer you can take advantage of compounding interest. Therefore, the earlier you start your retirement savings, the easier it will be.
For example, by starting your retirement savings in your 20s, you’ll have 30+ years for your money to grow. This will likely amount to hundreds of thousands of dollars earned in interest over the years when compared to someone just getting started at the age of 40.
8. Make Saving a Priority
It’s easy to push off saving for your retirement because it’s likely more than a few years away. That can sometimes be hard to fathom or worry, especially if you got 25-30+ years. But time creeps up, and instead, you need to make saving a priority.
9. Slowly Increase Your Retirement Savings Rate
When starting your retirement savings it can be extremely overwhelming. Instead of trying to reach your savings goals all at once, consider a small increase to your savings over time.
For example, setting aside an additional 1% each year for retirement can be much easier to accomplish than an additional 5%. Try to increase your savings rate by 1% each year to get started.
10. Set Goals and Track Them
By setting goals, you can have something to strive for. Without them, you’re much less likely to stay disciplined to achieve your goals. Try to set monthly goals that are both challenging but also attainable. One of the biggest mistakes people make when it comes to setting goals is making them too easy or far too difficult to accomplish.
11. Ignore the News and Don’t Try to Time the Markets!
Saving for retirement is a long process. Do not get discouraged by short-term volatility in markets. Because the economy works in cycles, it’s completely normal to have years that far outperform and far underperform others. When these massive swings occur, some investors will try to “time the market” to maximize their gains. This strategy has been proven extremely difficult, if not impossible, to accomplish.
Frugal Living Tips: The Essential Guide To Start Saving Money
People who live frugally aren’t necessarily cheap, they just try to make their dollars stretch as far as possible. Living frugal doesn’t mean that you can’t go out to eat, buy your daily latte, or go out with friends on the weekend.
Read More: Frugal Living Tips: The Essential Guide To Start Saving Money
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