One in six Americans says saving is one of their top financial priorities, according to Bankrate. If you’re looking to boost your savings potential, check out these top 10 tips for saving for retirement.
Start or add to your emergency savings account. Only one in four Americans have enough savings to cover them in an emergency, with more than 25 percent having none at all. Search around for the best interest rates on savings accounts, sign up for direct deposit, and make sure you add a little bit every pay day. This account should remain liquid in the event you need the cash for hospital bills, car repair bills, etc.
- Increase your 401(k) contributions. This is the best way to strengthen your retirement savings, but if you’re only contributing the minimum, you’re not getting the full advantage. Especially when you have an employer match program (this is free money!), go for the max amount and watch your nest egg grow.
- Contribute to your IRA. You and your spouse, as working Americans, are eligible to add to an IRA. As of 2015, if you are under age 50, you can contribute up to $5,500; if you’re older than that, you are allowed up to $6,500. Open the account with a bank, credit union or brokerage firm and invest as you please. This approach to savings makes a great complement to your workplace 401(k).
- Know your goals. According to the Department of Labor, you will need at least 70 percent of your pre-retirement income in order to keep up with your current standard of living once you stop working. Planning ahead is therefore imperative if you want to hit that mark and live comfortably in your golden years.
- Make a partnership. Come up with a plan with a reputable stock broker or financial planner. Just be sure to stay educated on your goals and know what’s going on. That includes knowing the name of a securities lawyer you can trust.
- It’s never wise to put all your eggs in one basket. The key is to diversify, in order to reduce your risk and maximize your return. Re-evaluate your plan over time to see if your needs have changed, and adjust your plan accordingly.
- Look into an employer pension plan. Visit your HR department and inquire about any pension plans that may be offered by your company. Find out if you are covered, what it entails, and what the benefit is worth. You can do this by asking for an individual benefit statement, and do the same with your spouse.
- Hands off the retirement account! You may hit a rough patch in your 40s or 50s and consider withdrawing cash from your 401(k). However, this is never a wise idea, as you’ll not only lose principal and interest, you will lose your tax benefits or pay hefty withdrawal penalties.
- Inquire about social security. You can count on social security benefits totaling about 40 percent of what you earn before you retire. Head to the Social Security Administration’s Website to estimate your benefit through the retirement estimator.
- Start a side business. Whether you sell your handmade goods on Etsy or engage in affiliate marketing, you can rake in some money on the side to put directly into your retirement account.
Following these handy 10 tips and sticking to them can help ensure a comfortable retirement for you when the time comes.
Thomas Law Group specializes in arbitration and litigation of securities and commodities disputes on behalf of investors. Contact us should you require our services.