Retirement can easily last more than twenty years so that old
advice that you need one million dollars to live off of is no longer
applicable. After all, medical costs for the average retired couple can
easily cost $220,000 alone, according to Fidelity Investments. Add
housing expenses and the cost of food and entertainment, and it’s easy
to see why one million dollars isn’t enough to live off of in
retirement.
Whether you have amassed a sizeable nest egg or you have a lot of
catching up to do there are ways to boost your retirement savings. From
maxing out your company sponsored retirement plan contributions to
opening up an IRA, here’s how to do it.
Take Full Advantage of Company-Sponsored Retirement Plans
One of the easiest ways to start saving for your retirement is to
fully take advantage of a retirement savings plan being offered by your
company. Not only are these savings vehicles tax-advantaged, which means
your contributions are tax-free, but companies often
offer a matching component
that in essence gives you free money. It may seem like a no- brainer,
but far too many employees choose not to get the full match from their
employer and some don't contribute to a 401 (K) at all. But setting
aside even as little as $50 per pay check can go a long way in
increasing the amount you save.
Open Up an IRA
Many people will make the mistake of contributing to a 401 (K) plan
and nothing else. They wrongly figure that is enough to support them in
retirement. But if you want to boost your savings even further, then
it’s a good an idea to open up an IRA. When it comes to an IRA, savers
can either go with a traditional IRA or a Roth IRA. With a traditional
IRA contributions are tax deductible, and you don’t pay taxes on your
gains until you withdraw money. With a Roth IRA, the gains from your
contributions are tax-free.
Contribute the Maximum in Your 401 (K) and IRA
The whole idea behind company-sponsored 401 (K) plans is to get
employees to put money away for retirement. The tax-free component of it
is supposed to serve as an added incentive to contribute as much as
possible. But most employees don’t go all the way and contribute the
maximum allowed, despite the benefits of doing so. If you want to
enhance your retirement savings and can swing it, contributing the
maximum will help a lot. For 2015, people 50 or older can contribute up
to $24,000, and those under 50 can contribute up to $18,000. The same
idea can be applied to an
IRA as well. For 2015, savers 50 or older can contribute a maximum of $6,500. The maximum is $5,500 for people younger than 50.
Rein In Your Spending
One of the easiest ways to boost the amount of retirement savings you amassed is to
rein in your spending.
In this instant gratification culture, it’s easy to waste money on cups
of coffees, trips to the nail salon or eating out three nights a week.
But if you were able to curb some of that spending and instead put it
into your retirement savings account you will be better off in the long
run. After all that $5.00 cup of java may be tasty but if you put the
money you spend on coffee each month into your 401 (K) it will grow a
lot.
The Bottom Line
Retirement can conjure feelings of fear and stress, but it doesn’t
have to be that way, granted you save in advance. Whether you have been
savings for years or are just starting out, there are ways to boost the
amount you put away for your golden years. From taking full advantage of
company-sponsored retirement accounts
to reining in your spending, there are a lot of ways to ensure you have
enough money when you eventually walk off into the retirement sunset.
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