If you're like many Americans, you haven't saved as much as you'd like for retirement. But you can take steps now to boost your retirement savings. These seven tips may help you get back on solid footing with your savings plan.
- Automate your savings. Have money taken out of your paycheck before you receive it. You'll learn to live on the smaller net amount as your savings continue to grow.
- Spend less. It sounds simple, but it's a challenge for most people. Create a budget that prioritizes retirement and emergency fund savings. Pay off all high-interest installment debts such as credit cards. Then look at discretionary expenses you could eliminate or reduce, such as expensive coffee drinks, frequent dinners out or a pricey TV plan.
- Increase your savings. If you have a few years before retirement, strive to save 10% of your income each year, then increase it annually by 1-2%, or even more if you receive a pay increase. If you can't contribute 10%, don't worry. Save as much as you can; every little bit helps. And as you near retirement, you can make catch-up contributions to your retirement savings to jump-start a stalled plan.
- Don't overlook matching funds. Contribute enough to your retirement plan to earn matching funds from your employer, if they're available. Not taking advantage of this opportunity is like leaving money on the table.
- Review your investments. If your mix of investments is too conservative or lacks enough diversification, your savings may be stalled. Contact a financial professional to discuss reallocating funds so your retirement savings may continue to grow.
- Work a few years longer. If your health and circumstances allow, consider working a year or so beyond traditional retirement age, even if it's a part-time job. The income may allow you to meet expenses while keeping your savings intact and growing. Another benefit: You may be able to stay on your employer's heath care plan.
- Downsize. If your current expenses and lifestyle are too great for you to save regularly, think about minor adjustments you can make to your lifestyle to help save money. Pour the savings directly into your retirement account.
If you need additional guidance reworking your retirement savings plan, consult a financial or tax professional. And review these pointers from State Farm® if you're trying to decide when it's time to retire.