Ah, the daunting thought of saving for retirement. Am I on track? Will I have enough? Will it last long enough? These are all questions everyone needs to address and plan for.
While, ideally, these questions should be addressed sooner rather than later, there a few ways to play catch-up and boost below-average retirement savings.
Let’s start with the basics here. Individuals are now able to save up to $19,000 in their 401(k) and $6,000 for individual retirement accounts like a Traditional or Roth IRA.
If you’re over 50, you can make catch-up contributions. The limits for those contributions are an additional $6,000 for 401(k) plans and an additional $1,000 for IRAs (CNBC). Make sure you take advantage of the additional contribution allowances in order to really accelerate the growth of your money.
Remember, contribution limits change from time to time. It’s important to stay up to date on contribution limits to see if you can put even more toward your retirement goal.
One last thing to remember is that you can max out your 401(k) AND max out an IRA in the same year. Just know that “if you, or a spouse, participate in a retirement plan at work (no matter how much you contribute), the tax deduction for traditional IRA contributions may be reduced or eliminated, depending on your income.” (QDT)
If you think 40 or even 50 is too late to get started, check out the chart below showing the huge difference 5 years can make.
Those who choose to continue working beyond the retirement age see great benefits. Working an extra year adds another year of earnings to your Social Security record AND your benefit will increase a certain percentage from the time you reach full retirement age until you start receiving benefits, or until you reach age 70 (SSA.gov).
Unfortunately, 55% of Americans end up retiring earlier than they would have liked, with health reasons being the number one cause. Other top reasons include an unexpected job loss and the need to care for a loved one (The Motley Fool).
If you can, delay retirement a few extra years to play catch-up and let that money work for you, it can really make a difference.
By now we all know that everyone needs to make and stick to a strict budget- especially if you are playing catch-up. Be sure you know what expenses you plan to retire with and what your lifestyle will entail. It is also a good idea to practice living within your retirement budget before you retire to prepare yourself.
When you do retire, you should also stick to the rule of thumb of not withdrawing more than 5% from your account each year. This means if you’ve socked away $1 million for retirement, you should be prepared to live off of $50,000 per year.
It’s time to invest outside of your retirement plan. Put together an investment mix focused on Growth. Make sure the time frame and tolerance for volatility are in line with your goals.
The DiversyFund Growth REIT is the perfect addition to any retirement plan. With a 5-year target, it truly helps investors build wealth, rather than seek short-term gains. 2018 DIversyFund investors saw 17.3% returns. High returns will always aid in boosting retirement financials.
If you are in catch-up territory, every penny counts. This means you definitely don’t want to be caught paying extra fees on investments, expenses, or taxes on something like a mutual fund. Always make sure you’re aware of any fees and expenses associated with your investments.
At DiversyFund, we are currently waiving our 2% Asset Management fee and since day 1, we’ve been a no-fee platform. Take advantage and start investing today!
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