How to grow your retirement money today.
It’s never too late to start saving more for retirement, and recovering from a late start on saving is easier than you think.
Key Takeaways
- Most people are not saving as much money as they could be, or should be
- Finding ways to save more money is a lot easier than you think
- It is critical to enter retirement with your own savings strategies
Here’s the hard truth — the reason people retire with no money is not because of a bad rate of return. It’s not because of fees. It’s because they don’t put any money into safe money investments.
The bad news is that your retirement will likely cost you more money than you think
Many people entering into retirement think that their living expenses will drastically decrease once they retire, and they can with a debt-free lifestyle, but there’s a high probability that your expenses will remain the same, and likely increase. With continuing car payments and home mortgages, motorhome purchase and long-awaited travel destinations, living expenses for retirees may not decrease like we think. Often medical costs, long-term care expenses and helping out family and friends can add to your annual expenses.
It is because of theses reasons that you need to be financially prepared for retirement with a healthy level of savings. By not properly preparing for your spending in retirement, you can really struggle with living expenses in your post-career adventure.
Let’s celebrate those of you that have already started saving towards your retirement. Congratulations! Keep growing that habit. For those that may not be saving as much as you should be, or could be, let’s get excited for getting better at paying your future self. Let’s look at three simple ways that you can use to significantly grow your money.
- Get better at being on a budget. If you have been on any sort of budget for any duration of time it’s often eye-opening to track where your money goes and the little purchases that eat up your hard-earned income. Often people approach a budget like a hardcore diet in that it’s so intense it isn’t sustainable for long-term results. The reward of sticking to a budget is knowing what money is coming, where your money is going, and what extra money we can find to pay our future self. One of the most revealing attributes of a budget is intentionally mapping out all the categories you spend money in. Once you know every coffee you buy, milkshake trip the family makes, and the price of Friday nights at the movies you are in a superior position to tweak your spending and supercharge your retirement savings.
- Get your free money from your employer. Did you know that your employer most likely has a policy that they will also give money to your retirement savings. That’s right! Many employers sponsor an employee retirement plan. And, if you are a California-based employer you are required by the state to provide an employer sponsored plan. Most often employees find this is the form of a 401k plan – and your employer may provide a matching contribution. Many times this matching contribution is in the form of a sliding scale — think 1% match for 1% contribution; 3% (employer) at 3% (employee), and 4% (employer) at 4-10% (employee). Every dollar that your employer contributes is free money in your retirement savings. If your employer will match up to $7,500 annually and you are currently only putting in $4,000 a year, push yourself to invest the extra $3,500 in your future self. Think about it, it’s a pretty awesome deal.
DID YOU KNOW: Contributing an extra $200 a month in a tax-deferred retirement account does not lower your take-home pay by $200
- Outsmart yourself with automating your savings. You may be one of many who have automated some of your reoccurring bills as a way to streamline your monthly payment. If you participate in your employer-sponsored retirement plan, your company payroll automatically deducts your contributions as an effective way to fund your retirement instead of you spending the money elsewhere. Why not implement the same principle of automating payments into your additional retirement strategies. Most of your Annuities, IRA’s, Life Insurance policies, 7702 Plans and Roth options offer an automatic savings feature. Use this as part of your on-going budget to stay on track with your retirement saving goals. Learn six simple steps to a budget in 2021 here
