Are you considering boosting your monthly retirement contributions but unsure about how to go about it? Perhaps you desire to amplify your savings, but the figures just don’t seem to align. Don’t fret, even saving a small amount is better than none at all. If you aren’t currently able to reach the maximum savings limit in your retirement account, it’s no cause for concern. You can always scale up gradually year by year. Here are five practical ways you can make slight adjustments to max out your retirement account.
Presently, the maximum contribution for a 401(k) is $19,000, while for either a traditional or Roth IRA, it’s $6,000. I managed to maximize my retirement contributions for the first time this year. I know it may seem like a hefty sum to set aside yearly, and indeed it is. However, even with such savings, you can still maintain your current lifestyle.
While certain adjustments might be necessary, they might not drastically affect your budget or lifestyle. Here are five feasible adjustments that could help you achieve your retirement account goal next year and in the years to come.
CAR OWNERSHIP
One sacrifice you can make to maximize your retirement fund is your car. However, this doesn’t mean you have to abandon the idea of owning a car altogether. We drive older vehicles that have been fully paid for and find it perfectly satisfactory. With the average car payment being around $400 to $500 monthly, owning a car can be quite pricey.
In fact, just $500 a month can max out an IRA, considering the annual contribution limit for individuals below 50 is $6,000. As cars depreciate quickly, purchasing a brand new vehicle may not be financially wise. Second-hand cars are typically more affordable, allowing you to save the money typically spent on car loans for your retirement.
DOWN-SIZE YOUR LIVING SPACE
Currently, my spouse and me are residing in a home smaller than what we dream of owning, and honestly, we’re okay with it. We purchased our first home when we were 26 and 29, respectively. Although it’s a small place, it’s perfect for our small family. By maintaining a smaller home, we can save considerably on mortgage, upkeep, and repair costs.
Sure, we’d love more space and amenities, but I’m comfortable with staying in a 1,300 sq.ft. home for the moment. I appreciate the small things about our home, like the fireplace and the garden boxes that came with it. Despite technically forgoing our dream home, I believe we will eventually purchase it when the time is right.
BUDGET-FRIENDLY TRAVEL
You don’t have to forfeit traveling to enhance your savings. Instead, find ways to cut the costs of your trips. This is where frugality comes in – it permits you to save without compromising on the activities you cherish. Look for flight sales, consider staying with friends or relatives, or use services like Airbnb during your travels.
Delayed Gratification
We’re immersed in a culture where everyone wants things promptly. To avoid debt, consider deferring immediate enjoyment and venture to budget for high-priced purchases.
I’ve been tempted to buy things on a whim and had to practice delayed gratification. By waiting and planning, my budget allows me to live as I wish, avoiding unnecessary debt.
YOUR TIME
Unfortunately, time isn’t renewable. With this in mind and the trading of time for money, you may need to take on an extra job or part-time gig. Despite the additional effort, it’s usually worth it. It might even result in a sizeable surplus at the end of the year that could eventually be converted to an investment.
Consistently prioritize saving and stay committed to achieving your goal of maxing out your retirement contributions next year and subsequent years. Remember, budget wisely, and your efforts will be worthwhile in the end.
