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Start saving now
Now that you’ve thought about your retirement plan and calculated how much you’ll need in retirement savings, it’s time to increase those savings. The good news is that it’s never too early or too late to start saving for retirement. You don’t have to wait until you’re approaching retirement to make changes in your spending habits to stash extra dollars into your retirement fund account. And if you are 50 or older, you may be able to take advantage of catch-up opportunities that could potentially increase your retirement income.
How to increase your retirement savings
Cut back on eating out.
Eating out less—even just one or two fewer times a month—can really add up.
Skip the $5 latte.
Brew a cup of coffee at home and bring it to work with you in an insulated travel mug.
Resist impulse buying.
Plan your purchases ahead and then search for sales and discounts.
Wait to purchase any luxury items.
Do you really need that 60-inch flat-screen TV? Wait two weeks before buying it—this gives you extra time to really decide if you want to part with your money.
Review your monthly bill statements.
You might find you’re paying for services you don’t use or find areas where you could scale back.
Save unexpected income.
This means your tax refunds, extra income as a result of a raise, bonus money, and that inheritance from Uncle Joe. While it may be tempting to upgrade your lifestyle, first think back to your original retirement goals and ask yourself how badly you need that new iPad.
Consolidate your old 401(k) accounts.
Have you left behind a 401(k) plan from a previous employer? Consolidating your 401(k) plans into one, such as a rollover individual retirement account (IRA), makes it much simpler to work with them as a single portfolio—which may also make it more likely for you to stay on top of your investments and make changes as needed. And it can help eliminate any extra fees you may be paying to multiple fund administrators. While you don’t want to put all your cookies in one basket, you also don’t want to leave crumbs everywhere.
Catch-up with your retirement savings.
Investors age 50 and over can make “catch-up” contributions to IRAs—both Roth and Traditional—and workplace savings plans such as 401(k)s. In 2010, those ages 50 and over could contribute an additional $5,500 to their 401(k) plan and an additional $1,000 to their IRA; check with your tax or financial advisor for the latest catch-up contribution limits.
Always be on the look-out.
Look for ways to save money on your family’s technology needs, groceries, and almost everything else.
Next in this article series, find out what retirement funds might work best for you.
This article contains general information. Individual financial situations are unique; please, consult your financial advisor or tax attorney before utilizing any of the information contained in this article.
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