Ways You Can Boost Your Retirement Savings

posted on Wednesday, January 25, 2023 in Financial Tips

Having enough money for retirement should be one of the top long-term priorities for many people today. This ensures you’ll have enough to support yourself even after you retire or ease down on work. Although Social Security is available for everyone, it’s not designed for retired people to depend on exclusively.

Having retirement savings ready gives you enough peace of mind to know that your daily needs will always be met. Although saving will take a lot of time and effort, you can do a few things to boost it.

Sign Up for a 401(k) Plan Early

A 401(k) plan is a retirement plan that most employers in the country offer their employees. It gives the benefactor tax breaks on their contributions. A portion of your paycheck is deducted to be invested in this plan. Also, you can bring your previous contributions with you if you decide to change jobs.

One significant advantage of signing up for a 401(k) plan early is the fact that this allows your money to grow faster due to compound interest. It’s the interest that accumulates on the initial principal. Your savings may not look like much at first, but you’ll be surprised by how much it adds up over time.

The two main types are the traditional 401(k) plan and the Roth 401(k). Traditional 401(k) allows you to make contributions before taxes are calculated. Meanwhile, the Roth 401(k) is funded after your money is taxed—funds that can be withdrawn tax-free when you reach retirement age. Ask your employer what type of plan they offer so that you’ll know what you’re getting into when you sign up.

Open an IRA

Besides 401(k), you can also try opening an individual retirement account (IRA). Unlike 401(k), which is employer-sponsored, IRAs are accounts that you open and invest on your own. Like 401(k), IRAs also have traditional and Roth plans.

Although an IRA’s contribution limits are lower than that of a 401(k), it can offer you more flexibility and investment options. Having both a 401(k) and an IRA can significantly boost your savings depending on your income level.

Consider Investing

Many people today are now opening brokerage accounts. These are investment accounts used to buy and sell stocks, bonds, and other assets. In the long term, it can be a great retirement savings option due to its tax advantages. However, investing is risky, so be sure to work with a fiduciary financial advisor.

If planned your finances correctly, you’ll have sizeable savings for your retirement, allowing you to enjoy other things. If you need help with financial matters, talk to one of our representatives at Community 1st Credit Union today.