Smart Strategies for Increasing Your Retirement Savings | St. Johns Bank
Regardless of what age you are, there is no better time to start thinking about retirement savings than right now.
Conceptualizing what we will need in retirement can be tough, and with a long timeline, many people assume they can play catch up with their savings goals as their target date approaches—however, due to compounding interest, starting early is much more beneficial, even if you are only saving a small amount each month.
If you do find yourself falling behind on your retirement savings goals, there is no need to fret! Most people are behind target when it comes to retirement savings, but there are some smart ways you can increase your funds to ensure you can get back on track.
How to Increase Your Retirement Savings
Take full advantage of employer matching. If your employer offers a 401(k) matching program, make sure you find out the details and take full advantage of it. While forgoing a percentage of your paycheck can be daunting, these pre-taxed contributions combined with employer matching can quickly begin to add up in your 401(k) account.
Don’t let your spending increase with lifestyle inflation. If you suddenly have more money coming in each month, whether it be from a raise or from paying off a debt, it can be easy to fall victim to “lifestyle inflation” and begin spending more. However, if you invest the extra money into your retirement accounts instead, you can keep your lifestyle the same but still increase your total savings every month.
Be sure you are using the right accounts. There are many different types of investment accounts out there, but for retirement, you will likely be dealing with a 401(k) and an IRA. Both of these accounts have their pros and cons, so be sure you understand the details of each to make sure you are making the smartest use of the money. For example, most people will choose to put a percentage into their 401(k) to utilize employer matching and then put the rest of their funds in an IRA, which may be invested in different accounts.
If you need help managing your money, that’s exactly what we are here for! Contact us today for more information about the accounts and services we offer.