What’s the best time to start saving for retirement?
Now.
With retirement, you can simply never save enough. It is your future we are talking about, so it’s a good idea to make it a high importance, long-term financial goal of yours.
If you want to save more for retirement, here are a few ideas to get the ball rolling.
1) Get Your Employer Match
If your employer sponsors a match to your retirement account, at the very least it’s a good idea to contribute enough to get the entire match. Failure to do so means you are leaving part of your benefits and salary on the table.
When your employer is adding money to your retirement account, it can grow much more quickly. Take full advantage of any retirement benefits you are offered through your job.
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2) Save Automatically
One way to ensure you pay yourself first is to put your savings on autopilot. Make your retirement contributions automatic and you’ll be able to watch your accounts grow without any additional effort.
Most retirement accounts allow you to set up automatic contributions and automatic increases, making it easier than ever before to save for retirement.
3) Spend Less
Spending less not only allows you to save more for retirement, but the practice of living below your means allows you to be better prepared for a future on a fixed retirement income.
You can start by slashing as many expenses as you can and putting that money towards retirement or debt instead. By simply cutting back, you could easily save a couple of hundred extra dollars a month for retirement, which with interest could result in thousands of dollars in profit.
4) Don’t Touch Your Savings
While there are certain situations that allow you to take a loan or hardship withdrawal from your retirement accounts, it is always best to leave them alone. Why?
401(k)’s are company sponsored plans that must comply to certain rules set by the Internal Revenue Service. While you are allowed to take a loan from your 401(k), you must also pay it back and lose out on any potential interest you could have earned.
A hardship withdrawal from your employer sponsored 401(k) doesn’t need to be paid back, but it is taxed at a very high rate, you lose out on interest, and you are not allowed to contribute to your retirement plan for 6 months. Not to mention, by taking a hardship withdrawal, you are taking money out of your retirement account, which is counterproductive.
5) Create an Emergency Fund
We all are subject to financial emergencies. Instead of relying on your retirement account or credit cards to support you in the event of an emergency, it’s a good idea to start saving for an emergency fund today.
An emergency fund is money set aside specifically for unexpected or sudden major expenses, such as a car repair, medical bill, or a job layoff. By setting money aside in an emergency fund, you won’t have to rely on your retirement fund as an additional source of cash. The goal of an emergency fund is to make sure it is liquid, or accessible, cash.
6) Start Earning More
Earning more money makes it easier to increase your contributions to your retirement accounts. If you can increase your income at your 9-5 you may immediately have extra income to put towards retirement.
Another option is making more money outside your 9-5. By starting a side hustle, you can start earning a couple hundred, if not thousands, of extra dollars every month. And the good news is that anyone can start a side hustle today.
Whether you chose to start your own blog or website, sell a product or service, or start a side hustle, finding ways to increase your income will only help you reach your financial goals faster. Here’s 50+ online and at-home side hustle ideas.
7) Contribute to a Health Savings Account
Many health insurance plans these days are high deductible health plans (HDHPs). While HDHPs have a high deductible, they do come with one big benefit: health savings accounts, or HSAs.
HSAs are arguably the best retirement account out there because not only do you get unmatched tax benefits when you use it for qualified medical expenses, you also can withdraw it in retirement and get taxed as regular income, similar to a traditional IRA. If you aren’t taking full advantage of the tax benefits that come with your HSA, you will want to start.
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How have you started to save for retirement? What’s the easiest change you could make today to start saving more?
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totally agree with this post, it is really helpful for who needs to understan the importnace of budget and savings:P
Number 6 is the one that I’m working on right now. I enjoy my job, but the salary is not where it needs to be.