Is It Possible to Catch Up on Retirement Savings?

retirement savings
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One can catch up on retirement savings through intentionality with finances.

You have been working for decades.

In fact, you are now closer to retirement than the day you began your career.

Unfortunately, you did not start saving enough or early enough for retirement.

This leaves you with quite a bit of ground to cover before you leave your job.

According to a recent Money Talks News article titled “The 7 Fastest Ways to Catch Up on Retirement Savings,” you can take steps now to improve your retirement nest egg.

What should you do?

Retirement savings should be tackled strategically.
Those nearing retirement should take advantage of opportunities to catch up on retirement savings.

Look over your budget.

Setting a budget helps you strategically allocate your money.

By reviewing your current budget, you may be able to make cuts to allow more money to be saved for retirement.

Doing so will help you achieve your financial goals.

“Catch up” your 401(k).

Are at least 50 years old?

If yes, you can make catch-up contributions to your 401(k) beyond the base 2020 contribution limit of $19,500.

Under current rules, you can contribute an extra $6,500 each year to your 401(k) retirement savings.

If you have a traditional or Roth IRA, you can contribute $6,000 and add an extra $1,000 after turning 50.

Take advantage of investment opportunities.

If you have an employer match with your 401(k), then you should contribute at least enough to maximize the available amount.

Think of it as “free” money from your employer.

You also should take advantage of the health savings account match as well, especially if your employer provides this option.

If you have income left over, contribute as much as possible to your Roth and traditional IRA accounts.

Boost your earnings.

You may need to find extra income to help you meet your retirement savings goals.

How can you do this?

You may consider updating your skills or getting additional training.

You can also consider changing jobs or finding additional part-time or contract work.

Growing your income over time can help you accelerate you retirement funding.

Do not act impulsively with raises and windfalls.

If you receive a bonus, inheritance, or a raise, do not spend it right away.

Instead, funnel it to your retirement savings.

If you need some of these funds immediately, you should split the amount between retirement savings and a checking account.

Minimize your spending.

If you spend less, you will free up more money for your retirement savings.

At the same time, doing so teach you to live on less.

This means you will require less money in retirement to satisfy your standard of living.

Make a “mortgage payment” after the house is paid off.

Have you recently paid off your mortgage?

Instead of giving yourself a raise, continue to live as before and allocate these “payments” to your retirement accounts.

The same practice can be applied to car loans, student loans, and any other debt.

Although the best way to save for retirement is to do so early, applying these strategies can help you to catch up on retirement savings.

Reference: Money Talks News (Oct. 8, 2020) “The 7 Fastest Ways to Catch Up on Retirement Savings”