How To Jump Start Your Retirement Savings
It can sometimes be easy to get stuck in unproductive patterns of behavior when it comes to personal finances. That’s often the case when it comes to retirement savings. A person finds a reason not to contribute to their retirement fund for one year, and then the next, and soon they’ve become accustomed to foregoing retirement contributions entirely.
We know that not making regular retirement savings contributions can have a devastating impact on your ability to retire comfortably or perhaps even to retire at all.
If you believe that you may be behind schedule when it comes to planning for retirement, here are some tips for how to jump start your savings.
- Use Your Tax Refund. Many individuals struggle to come up with the money to make a maximum contribution to their IRAs each year. Fortunately, most people have a readily available source for a significant portion (or perhaps even all) of that contribution in the form of their tax return. Consider depositing your full tax refund check (up to your annual contribution limit) into your IRA as soon as you receive last year’s check. This gives you an immediate jump start on building a large retirement nest egg.
- Set Up a New IRA to Receive a New Account Opening Bonus. Provided that you are eligible to do so (which will depend on whether you’re covered by an employer-sponsored plan, as well as your level of income and whether you file a joint return with your spouse), you can jump start by setting up a new traditional IRA account and receive whatever new account bonus your local bank or a discount broker may be offering. Even if you’re only eligible to make a Roth IRA contribution this year, the long-term value of doing so is significant.
- Start Now. If you don’t find any offers or bonuses for opening a new account, you should still make your next retirement contribution immediately. Don’t wait until the end of the year, and don’t wait until it’s convenient or easy for you to make a contribution. Start the process of opening a new account tomorrow. This may come in the form of a new IRA, or perhaps beginning to make contributions to an employer-sponsored plan if you’re eligible but not currently participating.
- Take Advantage of All Employer Matching Funds. If your employer-sponsored retirement plan (the most common of which is the 401(k)) offers any type of matching funds, then start making contributions large enough to receive all of the matching funds that are available. Even if the investment options that are available in the employer-sponsored plan are not ideal (in terms of investment focus or fees), you’re still likely to have a stock or bond index fund-type investment available to you. The value of the no-cost employer matching funds is almost certainly too great to pass up.
- Automate Your Retirement Savings. You can jump start your retirement savings by taking away the opportunity for you to not save. Set up an automatic savings plan that makes monthly or quarterly transfers from your checking and/or taxable investment accounts into your IRA.
Besides the advice above, virtually anything you can do to boost your rate of savings will end up paying off many times over by the time you’re ready to retire.
