Saving for retirement is a major financial goal. If you're over 50 and feel like you're behind on your retirement savings, the good news is that you still have time to save.
So, what can you do to boost your retirement savings with your golden years approaching? Here are a few worthwhile strategies to successfully plan for retirement .
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1. Calculate how much you will need
The first step to map out a retirement savings plan is to determine where you are currently. Take a look at how much money, if any, you already have saved for retirement. Also, take the time to consider how much you’ll need to live the life you imagine for retirement.
The exact amount you’ll need varies based on where you plan to live, what type of living situation you prefer, your lifestyle costs, and more. For example, someone planning to retire in New York City and travel extensively will likely need to save more for retirement than someone planning to live in the Midwest and seldom travel.
If you need help adding up the costs, consider using a free online retirement calculator to come up with an estimate. Once you have a clear picture of how much you have to save before retiring, it’s easier to arrange your current finances around that goal.
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2. Meet with a fee-only financial planner to help you
A fee-only financial advisor can help you dive into the details of your current financial situation and map out how to achieve the retirement you have in mind. A competent financial advisor can break down the steps you’ll need to take.
Working with a fee-only financial advisor is especially useful if you aren’t completely confident in your investing knowledge. They can help you determine which investment strategies are best suited for your retirement and explain tax consequences.
3. Max out your retirement contributions for IRA, Roth, and 401(k)
As you build your savins=gs, opting to invest in the right savings vehicles can make a big difference. Traditional IRAs, Roth IRAs, and 401(k)s each offer a tax-advantaged way to save for retirement. If possible, make it a priority to max out your retirement contributions to all of the accounts you have access to.
As of 2024, savers can contribute up to $23,000 to their 401(k). Savers age 50 and older can also contribute up to $7,000 to the IRA of their choice for the year.
Maxing out these retirement accounts can help you make significant headway in your savings journey.
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4. Take advantage of catch-up contributions
For savers over 50, catch-up contributions are an option for tax-advantaged accounts.
If you are over 50, you can save an additional $1,000 in your IRA, which leads to a total contribution of $8,000 when you max out your account. You can also contribute an additional $7,500 to your 401(k), for a total of $30,500 in contributions for 2024.
5. Earn extra money
Saving for your golden years can be difficult because you still have regular bills to pay for. One way to make room for retirement savings is to make extra money .
The good news is that building an extra stream of income is very possible. Some ways to grow your income include taking online surveys, becoming an online bookkeeper, and proofreading. As you make more income, you can funnel the money into your retirement savings.
6. Get a raise
Depending on your job situation, you might be well overdue for a raise at work. Make a plan and ask for a bump to your salary.
If you can’t get a raise, consider switching jobs to find an employer willing to pay you more for your experience.
Make Money: 8 things to do if you're barely scraping by financially 7. Eliminate high-interest debt
Debt often acts like a drain on your financial resources, especially high-interest debt. If you are dealing with credit card debt, a growing balance can make it difficult to save for retirement.
Consider paying off this debt as soon as possible. When you eliminate the monthly payment, you can redirect the funds to your retirement savings.
8. Cut back on spending
Although cutting back on your expenses isn’t always fun, it does offer a way to save for retirement. If possible, look for ways to slash your biggest expenses. In general, Americans spend the most on their housing, cars, and food.
Some ways to save would include downsizing your living situation or trading in your car for an older vehicle. Additionally, skipping takeout meals and grocery shopping with coupons could make room in your budget for savings.
Bottom line
Although saving for retirement is a big goal, it’s possible to boost your savings by earning more, spending less, and paying off high-interest debt.
If you are ready to build a brighter retirement, then try implementing the strategies above to make fast progress.
Money tips that can work for everyone
No matter what your bank account balance is, there's always an opportunity to optimize and improve your finances. Here's a quick checklist of things you can look at today.
Focus on paying off your debt. Debt can hold you back from making progress with your overall financial well-being. Aside from cutting expenses, there are tools that can help you pay off debt faster like balance transfer credit cards and debt counseling.
Earning extra income can give you breathing room. If finances are tight, earning some extra money to supplement your income can make a huge difference. A new job is one option to consider, but if you're not ready to make a big change or already retired, a part-time side job could be a better choice.
Cut your expenses. It sounds painful and so not fun, but it doesn't have to be. Take a look at your biggest expenses because that's where you'll probably find the biggest savings. For example, auto insurance rates have been soaring so shopping around for a new insurance company can be the fastest way to cut your bill. Also, look for ways to cut your grocery bill (despite rising inflation).
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