How To Boost Your Retirement Savings
When it comes to retirement, there are a lot of factors that can help ensure your financial
security. While retirement might seem far away, it’s important to start planning early and make sure you are taking advantage of every avenue to generate savings.
Maximize Your Employer’s 401k Contributions
The most common method of retirement savings is contributing to your company’s 401k plan. At
a minimum, it’s important to take advantage of the maximum employer match, if there is one.
However, if you are utilizing employer contributions, be aware of vesting if you plan on changing
jobs. Typically, you don’t have full ownership of your matched funds until you have been
employed for a set period of time.
Invest, and do it early. This is easier said than done, which is why using automation is essential.
401k plans are so easy because the money is deducted before you see it. There are also IRA’s
to take advantage of. Automatic withdrawals can be made into a mutual fund, stocks, and
bonds, but be sure to understand your risk tolerance before making these decisions.
With returns on investing and even on your interest in a savings account, it’s always better to
save sooner rather than later. Compound interest is your friend. It is assumed (based on a 6.5%
return) that in order to become a millionaire by age 65, if you start at age 20, you should save
$310 monthly, starting at age 40, you should save $1,335 monthly, and starting at age 60, you
should save $14,149 monthly. If you wait longer, you lose the ability to utilize interest and will
end up spending more money to save the same amount.
Focus on Better Health
While you might’ve been aware of these basic retirement tips, one thing people tend to forget
about is health and how it can greatly impact retirement. Fidelity estimates the average 65 year
old retiring this year will spend over $275,000 on healthcare costs. According to the National
Council on Aging, 90% of Americans ages 55 and over are at risk for high blood pressure. This
is usually preventable through lifestyle choices. With a healthier lifestyle, less money will be
spent on healthcare costs, and can be applied to fund your retirement.
Work with a Financial Advisor
Lastly, but certainly not least, it is always recommended to work with a financial advisor.
Northwestern Mutual conducted a study that found that adults in the United States who work
with a financial advisor have “substantially greater financial security, confidence, and clarity than
those who go it alone.” Additionally, when looking for a financial advisor, it is important to work
with a fiduciary. Fiduciary’s are bound to act in their client’s best interest, regardless of the
benefit held by the advisor.