For some reason, a lot of people tend to put the idea of maximizing their retirement savings on the back burner and put everything on auto pilot until they retire. Unbeknownst to them, there are plenty of ways that they can boost their nest egg by making a few savvy decisions. Here are a few ways you can boost your retirement savings.
Start as Fast as You Can
The most important thing with all retirement plans is to start, and start early. The earlier you start, the sooner you’ll be able to benefit from all that juicy compound interest. If you start early, you’ll have the chance to reinvest some of that compound interest earlier as well which will lead to all sorts of benefits and investment opportunities.
Make Contributions to Your 401(k)
If your employer just happens to offer a traditional 401(k), then they have the added benefit of allowing you to invest pre-tax money in it, which is a major plus. For instance, if your income places you in the 15 percent tax bracket, and you invest a hundred bucks each pay period, the take home pay will only drop by $85.
What this ultimately means is that you’ll be able to invest more into your plan with less of an effect on your monthly pay. If, on the other hand, your employer goes with a Roth IRA, you should always consider in which tax bracket you’ll be post retirement to know if it’s a good idea. If you want to learn more about Roth IRAs and how they work, you can always visit a site like Dollar Cents which breaks down most types or retirement plans and what they entail.
Make Sure That Your Savings Are Automated
You’ve probably heard the saying “pay yourself first”. Well that’s especially true when it comes to retirement savings. Making sure that a certain amount of your weekly pay is directly taken out and put into a retirement account is one of the best ways to secure your assets. And the best thing about it is that you won’t even have to think about it once it’s set up.
Reinvest Cash Windfalls
In the event that your finances get better, you should consider reinvesting the money into your retirement account. If you get a raise for instance, you should reinvest at least 50% into your retirement plan. While it’s always nice to splurge, reinvesting in your retirement is always a wiser choice. The same goes with hefty tax refunds. If that is your case, it’s always better to spend a little and reinvest the rest in your retirement plan.
Consider Pushing Back Social Security
If you still feel like you can work and don’t want to start munching on your savings, then a good choice would be to hold off social security. The earliest you can start claiming your benefits is 62, however, the longer you wait, the larger the payments will be.
Planning for retirement doesn’t have to be difficult. With the proper ethic and discipline, you can easily boost your retirement savings. Just make sure that you follow the tips in this article if you want to get the best out of your retirement plan.