The Great Recession of 2007-2009, followed by the COVID-19 pandemic may have impacted your retirement savings.. In addition to economic setbacks, unanticipated medical bills or job losses can also play a part in affecting your retirement savings.
The good news is you can get your retirement back on track. In some cases, your future may look even brighter. These tips below can help you do just that:
Investing for Your Retirement
- Consider catch-up contributions. Fortunately, the IRS realizes that rainy days happen. They have given you an “out,” if you will, that allows you to make “catch-up” contributions in the years as you approach retirement age. In 2020, the 401(k) catch-up contribution limit is $6,500 per year. For an IRA, you can contribute an additional $1,000 per year. Taking advantage of this opportunity allows you to grow your retirement funds in the years leading up to it.
- Explore the gig economy. Consider taking on a “side gig.” We live amid the “gig economy.” If you have not heard of it, now is your chance to explore how additional earnings may impact your retirement plans. Put your experience, expertise, or just your time to work to make extra money. Becoming a ride-sharing driver, pet sitter, tutor, or grocery delivery driver are just a couple of options.
- Retire later. This simple solution can help you maximize your retirement savings, beginning with your Social Security benefits. For instance, if you begin receiving your Social Security retirement benefits at age 66, you only receive 100 percent of your benefits. However, if you wait four additional years and begin receiving your benefits at age 70, you’re entitled to 132 percent of the monthly benefits. Time, after all, is an investment too.
Ways to Save
Saving money, of course, gives you additional funds to invest in your retirement. There are many things you can do to reduce your spending. Use those savings to increase your investments as you approach your golden years. A few options include those listed below.
- Cut the cable cord. With so many streaming services available free of charge, you do not really need cable anymore.
- Cook at home rather than eating out. Reducing or eliminating the amount you go out to eat could save an enormous amount of money and help you fall in love with cooking. Even using a meal service that does the shopping for you can help you eliminate waste and cut costs.
- Downsize your lifestyle. If you are a two-car household, consider going down to one, especially if you are retired already. At the very least, consider paying one loan off so that you only have one car note. The idea is to make lifestyle changes that allow you to spend less each month and invest what remains.
There are many ways to get your retirement back on track without making significant sacrifices. The value of time is crucial for a successful plan. The faster you consider adopting some of these strategies the more time your investments have to grow and compound for future consumption. It’s wise to consider a conversation with a financial professional to guide you toward sound financial decisions as your retirement age approaches.
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