Worried about the amount of money going into your retirement account? If your initial plan to save $100 a month does not seem like it will be enough to meet your retirement savings target, it may be comforting to know that even that seemingly small amount can turn into a very comfortable nest egg over time.
Few people start to plan for retirement early in their lives. In fact, the majority of workers start to do so only when their golden years are just around the corner. Still, do not get discouraged if your retirement age is approaching and you have not been saving very much. You can start to save for retirement now, and take a step in the right direction!
Luckily, it is possible to boost your retirement savings without much effort, with these handy tips:
Automate Your Retirement Savings
The best way to save for retirement is to make automatic deductions from your paycheck every month. So, if the target contribution is saving 100$ per month, you can have that amount withheld before any income reaches your checking account. By automatically deducting savings through a direct debit into your retirement account, you will have the opportunity to grow your nest egg without even having to think about it.
Cut Back on Spending
Another practical way to save up more for retirement is to cut back on non-essential spending. Take a hard look at your monthly budget and identify luxuries you can forfeit every now and then. This can include things like eating out, entertainment, expensive clothing and fashion accessories, just to name a few. You don’t need to stop indulging yourself completely, but set a maximum monthly budget for extraneous expenses. You could end up saving 1200$ extra for retirement at the end of the year by simply choosing to cut back on two meals at a fancy restaurant every month.
Set Aside any Extra Money for Retirement
You can pad your retirement account whenever you receive a windfall of extra income. Before splurging that raise, bonus or incentive on an expensive vacation, take a moment to think about how much that money would boost your retirement savings. If there are other more pressing financial obligations that you need to take care of with the extra money, consider contributing at least a portion of it to your retirement plan.
Take Advantage of Saver’s Credit
When saving for retirement, it is important to find out whether you are eligible for saver’s credit. At the time of this writing, married couples, heads of households, and single persons with adjusted gross incomes of $61,000, $45,750 and $30,500 respectively can claim for saver’s credit. People with lower incomes get the biggest credits, and on an average, saver’s credit is worth 10% to 50% of the contribution amount on a retirement account.
Meet Your Employer’s 401k Match
One of the advantages of Self directed 401k retirement plans is that some employers offer a matching program for contributions. If your employer offers to match your 401k, take full advantage of the match by meeting the target contributions. For instance, an employer can offer to match 50% of worker contributions, which works out up to 5% of your salary. If you earn an annual income of $50,000 in this scenario, your annual retirement contribution adds up to $2500 and your employer would contribute an extra $1,250. This is essentially free money, which can boost savings in your retirement account with a very small monthly contribution!