5 (Nearly) Foolproof Ways to Fill Your Retirement Fund
Your financial stability and taking care of your family should be top priorities regardless of your
age. For those who are nearing retirement — or wanting to plan well ahead — there are
simple steps you can take to help preserve your financial stability when the time comes for you to
retire. The good news is that when you plan ahead and ensure that your family is taken care of, you
can fully enjoy your retirement when it comes.
The cost of living is getting higher, and when you're retired, you're living on limited income.
That’s why allocating financial resources for your retirement is essential. Once you leave full-time
employment, you don’t want to worry about where you'll get money to pay your bills and daily living
expenses. For most people, having a healthy savings account isn't nearly enough. With that in mind,
here are five tips to help you save more for retirement:
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Tip #1: Increase Your 401(k)
Many companies will match a percentage of an employee’s 401(k) plan contributions — some
even match your contributions dollar for dollar! Slowly increase the amount you're
putting into your retirement funds with each paycheck, and you’ll reap more benefits
from your company’s match. One perk of your 401(k) is that it's basically tax free until
you're retired. This way, you aren't paying taxes or interest on the funds you
accumulate until you begin to receive payouts.
(Note: Matching contributions from your employer may be subject to a vesting schedule. Consult with your financial advisor for more information.)
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Tip #2: Open a Line of Credit
While it seems counterintuitive to take out a loan or line of credit to help boost your
retirement funds, it’s actually a viable way to save money. By taking out a HELOC (home
equity line of credit), you can pay for home upgrades, health care or other expenses
without tapping into your retirement accounts. This way, you won’t pay hefty fees for
taking out your retirement funds early — ideally, you’ll pay off the HELOC before
retirement. This strategy may not be appropriate for everyone, so be sure to speak with
your financial advisor before taking out a HELOC.
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Tip #3: Consider Traditional & Roth IRAs
Even with Social Security and 401(k), you may not have enough cash to last you through
retirement. Traditional and Roth IRAs (individual retirement accounts) offer another way
to save money for retirement. You can contribute a total of $6,000 annually (+$1,000
more if you are age 50 or older) to your IRA accounts. The main difference between the
two is that a Traditional IRA is funded with pretax dollars, while Roth IRAs are taxed
up front. One major benefit of the latter is that you don’t have to worry about
increasing tax rates, since you’ve already paid taxes on the money you deposit.
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Tip #4 Increase Your Monthly Saving Goals
If you're following the 50/30/20 rule and are meeting your savings goal of 20% of your
income, you're doing great. But if you can find ways to cut back on your spending money
on a monthly basis, you should absolutely do so. Some suggestions include:
- Dining out less often
- Create a habit to dedicate a portion of each paycheck to retirement planning. Have
this amount transferred from your checking account to savings.
- Budget well and don't spend past your limit
- Use coupons and look for savings on items you buy regularly at grocery stores
- Take some of your unneeded clothes and household items to a consignment shop
- Replace credit cards with rewards cards that have a lower interest rate
There's always something you can cut back on or ways that you can save more each month.
It might not seem like much money now, but the earlier you start, the more you'll put
away toward your retirement savings.
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Tip #5: Use Your Financial Advisor as a Guide
An experienced financial
advisor can be beneficial when you’re designing your personalized retirement
plan. They have the expertise to help you and your family create a budget that fits your
needs and lifestyle in the long term. From helping you choose retirement accounts to
finding creative ways for you to increase contributions, a financial advisor can guide
you through everything you need to know about retirement planning.
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What it Means in the Scheme of Things
Retirement savings are imperative to your financial stability and success once you're no longer working
full-time. Our five simple tips can help you plan for your future and help ensure that your golden years
are comfortable.
Remember, there's no "perfect time" to start saving for retirement; you can begin at any age. By thinking
ahead, you’ll be more likely to be able to relax and enjoy your retirement rather than worrying about
whether or not you have enough money to carry you through.
If you’re ready to get started, or you want to have a professional look over your current retirement
assets, a Raymond James Financial Advisor can help! Contact us to set
up a free appointment today. We’ll work with you to customize your retirement plan so you can
have financial confidence and enjoy your Golden Years.