The cost of retirement can be excessive, thus it is vital to maximize your savings as much as possible. Various strategies will allow you to save more for your later years.
The first step for improving your retirement savings is to make sure that you actually do save. It is important to set aside money from a young age for retirement. Because of the time power of money, even small amounts put away over time can grow quite significantly. Carefully budget your earnings.
Utilize tax-advantageous retirement accounts
The government allows for tax advantageous retirement accounts. For instance, a Roth IRA will allow you to save more for your retirement. The government controls how much you can place into these accounts, and you should put as much as you can up to the maximum.
You also want to be careful about the types of tax advantageous accounts you utilize. Good Housekeeping explains that a Roth IRA can be more advantageous than a 401(k) because the earnings and withdrawals will not cost you tax. Also if you save more than you need for education in a 529 account for your children’s college education, you may end up paying a lot more in taxes.
Work with a financial planner
Navigating the turbulent waters of the investment world can be difficult. You may find that the services of a financial planner can help you save even more. U.S. News and World Report gives specific tips for finding a qualified financial planner. These include looking for references and screening credentials.
Take advantage of matching retirement account contributions
Many employers will match a percentage of 401(k) contributions. Not only will you get the benefits of the retirement account, but you will essentially get “free money” from your company. If you can, make sure that you contribute enough to get the maximum percentage from your employer.
Increase your credit score
Having a lower credit score may indirectly steal from your retirement savings. Banks will give you less favorable interest rates on loans for items like cars and houses. This money could otherwise be utilized for retirement.
Of course, one way to have more money to put away for retirement is to earn more. Look for a better paying position, ask your boss for a raise or consider freelance jobs to supplement your income. Make sure that at least some of this extra money goes towards retirement.
Even small measures that increase your retirement savings can add up to a significant amount over time. Try as many strategies as you can to boost your savings.