Planning for your golden years should remain a constant priority in your monthly budget, but the daily financial hurdles sometimes cause neglect or reduced input into your retirement funds. Luckily, there are a few smart strategies that can boost those contributions before the deadline each year.
The good news? The maximum annual contribution limit for 401(k) retirement plans will increase to $19,500, and you can add up to $6,000 each year to your IRA. So remember, you don’t need to maximize your retirement account by December 31st. You still have time until around April 15th of each year to do so.
1. UTILIZE THE EMPLOYER MATCH
If you have an employer who will match your retirement input, that’s a golden opportunity. Capitalize on this by committing a percentage designed to secure that matched amount. For instance, if your employer pledges to match half of your input up to 5% of your income, strive to contribute at least 5% of your income to secure the full matched funding. Additionally, all of this can be taken care of automatically through your payroll system.
2. INCREASE SAVINGS BY 1%
Boosting your retirement savings by just 1% might not seem consequential in the short-term, but it’s a significant move in the broader picture. For instance, if bringing home $3,500 per month, an extra 1% amounts to incremental savings of $35 each month – a manageable increase that could inspire you to save even more.
3. POUR YOUR RAISE INTO SAVINGS
Securing a raise provides an ideal chance to enhance your savings contributions. When negotiating a pay increase, instead of inflating your lifestyle expenses, channel the extra income toward ramping up your retirement savings.
4. INVEST YOUR TAX REFUND
Substantial one-time payments, such as a tax refund, can radically boost your retirement savings. File your taxes as early as possible if expecting a refund to add it to your retirement fund before the annual deadline.
5. OPT FOR A FRUGAL FESTIVE SEASON
While the holiday period can be heavy on spending, a bit of frugality can free up additional funds to enhance your retirement account. Try inexpensive Christmas ideas such as making homemade gifts, attending local free activities, reusing decorations, or choosing a stay-at-home New Year’s Eve celebration.
6. EARN EXTRA INCOME
Consider taking up flexible side jobs like working for DoorDash, Uber, or even walking dogs to earn extra income. Taking advantage of seasonal work opportunities or selling services on a freelance basis can also provide extra funnelled income into your retirement fund.
7. CUT BACK ON EXPENSES
Increasing your retirement contributions could be as simple as trimming down variable expenses. If you view this from a traditional 50/30/20 budget structure (needs/wants/saving and paying off debt), there are often areas you can tweak to bolster your savings. Opt for cheaper services, cancel redundant subscriptions, draft a more economical grocery list, seek better insurance rates, and dine out less frequently.
In conclusion, investing for your retirement should always be a top money management focus. Using a few of these tips can help you boost your retirement fund each year. Future you will certainly appreciate your efforts to eliminate unnecessary expenses, create an efficient budget, and leverage extra income or large lump sums for later life.
