When it comes to saving for retirement, the earlier you start to saving, the better. Luckily, there are many different ways to save for retirement. If you’re ready to grow your nest egg, and want to prepare for your future, here are 8 ways to save for retirement.
Contribute to your 401(k)
If your employer offers a 401(k), you can contribute pre-tax money into a savings account. Not only does this help with your federal income taxes (because the money you bring home will be less), but it also helps you save for the future without feeling like your monthly budget is taking a hit.
Match with your employer
Along with your 401(k), your employer may offer to match contributions up to a certain amount or percentage. If they do, take advantage of it, because the match that they offer equals free money towards your retirement.
For example, if your employer matches 100% of your contributions up to 3% of your salary, and you make $50,000 a year, that means they’ll add an extra $1,500 a year to your 401(k). So even if you just saved $1,500 a year, you’ll actually be saving $3,000 once you add in their match.
Open a Roth IRA
Along with having a 401(k), you can also open a Roth IRA to save for retirement. A Roth IRA is money that has already been taxed and is saved for retirement. That way, the money you are saving will grow tax-free. The minimum age requirement without a withdrawal penalty for the Roth IRA is 59 ½ . As of 2019, you can save $6,000 every year, and $7,000 if you’re over the age of 50.
To save for retirement without consciously thinking about it, automate your savings. Every month, have a specific amount of money saved automatically into your 401(k), Roth IRA, or both. That way, you don’t have to remember to transfer money every single time you get paid.
Save extra funds
If you get a bonus, earn extra commissions, or have a side hustle, you can use these extra funds to save for retirement. You don’t have to save all of it, but even saving just half of the extra money you earn can make a positive difference in your retirement account. A penny saved is a penny earned.
Play catch up
If you are over the age of 50, take advantage of the extra contributions you can make in your retirement accounts. With a Roth IRA, you can save an extra $1,000 a year if you’re over the age of 50. With a 401(k), you’ll be able to save an extra $6,000 a year.
That means that you have the chance to save an extra $7,000 a year, which can also help you catch up if you are behind on saving for retirement.
Plan to postpone social security
Did you know that you can postpone when you start receiving social security? At age 62, you can start withdrawing social security. However, if you delayed that to age 70, the money you receive monthly would increase, with studies showing up to 32% in increased earnings. Also, by postponing retirement, you increase the benefits for your spouse should you pass away.
Invest in other ways
Along with saving in a 401(k) and Roth IRA, you can also start saving for retirement in some non-traditional ways. Investing in housing and real estate, established businesses, or offering loans is a way that you can ensure that you are receiving money for years to come, without always having to work. Passive income is great for everyone, including retirees.
There are many ways to save for retirement. But these 8 ways can make a huge difference in your retirement fund and give you peace of mind that you’ve prepared for your future.
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