Enjoying the golden years of your life in financial comfort takes a lot of planning. If you don’t make sure you have enough money put away for your future, you could wind up running out of money.
Most people only start worrying about retirement savings when they are middle-aged. They’re leaving it quite late, and it’s hard to save enough money. You should be saving for your retirement from the time you get your first job.
As you approach retirement, you’ll want to boost your savings. Here are some ideas:
- Contribute to your 401(k)
Take advantage of the traditional 401(k) if your employer offers it. Your contributions to it are made before the taxation of your salary. This allows you to contribute more than if you were to take the money out of your paycheck after taxes.
Pay in the maximum amount you are eligible for when it comes to your 401(k). Try to match your employer’s contribution. Should you leave your job, you can decide what to do with your 401(k). Don’t even consider taking anything out of it before you retire unless it’s unavoidable.
- Sell assets you no longer need
As your retirement approaches, it’s a good idea to sell off any assets you don’t intend to use. Downsizing is an inevitable part of retiring. If you own a second property, you might be ready to sell it. Bear in mind that you’ll have to pay capital gains tax on the sale.
You could contemplate selling a junk car that you have no intention of fixing or using. It’s taking up space unnecessarily. You can also put the money you get to good use by investing it.
- Catch-up contributions
In addition to your 401(k), you should have established an individual retirement account (IRA). It is an additional savings mechanism for your financial future. One of the limitations of an IRA and your 401(k) is that you are restricted to the amount you can contribute.
However, once you turn 50, you can go beyond these imposed limits and make catch-up contributions. Take advantage of this opportunity to give your retirement savings a boost. There are limits on how much extra you can pay into these funds after 50. You can speak to your broker or tax consultant to find out how much more you can pay.
- Take control of your spending
The same people who tell you they don’t have extra money to save toward their retirement are the ones who spend freely. They always have money to buy coffee and lunch.
It’s great to have some money to spend on life’s little luxuries, but don’t do it at the expense of your retirement savings. Keep your spending limits realistic and save whatever money you can toward your retirement.
Set up a budget and stick to it, even if it means skipping your daily latte and making your own coffee. This should become an even bigger priority as your retirement nears.
- Put off drawing on Social Security
You are eligible to receive Social Security payments from the age of 62. If you need to, you’ll have to take advantage of this money. But if you can, you should try to delay it.
For every year from the age of 62 until the age of 70 that you delay accessing Social Security, your monthly benefit increases. This action also increases your spouse’s future survivor benefits in the event of your death. The difference between the benefit of someone who starts taking Social Security at age 62 and someone who defers it to age 70 can be quite substantial.