Easy Ways to Boost Your Retirement Account
Everyone needs a retirement account. While older generations were able to count on Social Security and company pensions, nowadays we must rely on ourselves and our own savings to get us through our retirement years. The sooner you can start saving for retirement the better. Of course the more money you can save the better as well. Thinking about needing to sock away a million dollars or more in your lifetime can be very daunting. Here are some ideas to help you set aside the money you need to support yourself in your retirement years.
- Start early. The power of compound interest is amazing. Putting away $25 a month starting at age 18 will earn you more money in interest than if you set aside $100 a month starting at age 40. Adding $25 to an account earning 8% interest for 47 years will give you $155,309 at age 65. Adding $100 to an account earning 8% interest for 25 years will give you $95,103 at age 65. The early you start the easier it is to save a large amount of money.
- Make sure you have an account that you can add to whenever you want to. Many accounts require an automatic deposit schedule. While this is great, you also want to be able to add to it every chance you get.
- Set up automatic transfers. Having our IRA contribution pulled directly from our checking account each month means I have to make that contribution. So many times we mean to do something but then never get around to it, or end up needing the money for something else. Make it automatic and it is so easy you can forget about it.
- Get your employer's match. Many companies will match a certain percentage of your income and add it to your retirement account. This is free money above and beyond the interest earned in the account. So do whatever you can to set aside the required amount in order to get your companies match. (The percentages vary from company to company.)
Many people just don't have extra money to save each and every month. Here are some ideas to help you boost your retirement account.
- Save your change. We save all of our change here and every couple of months I have $40-$60 to deposit at the bank. This is an easy way to boost your retirement savings without missing the money at all.
- When you receive a rebate, put it in your retirement account. Because it can take weeks to receive a rebate, I can't count on that income in our regular budget. So I consider it extra. I use all rebates we receive to boost our savings account.
- Gift money. If you receive money as a gift, put some or all aside for retirement. No it isn't as exciting as going out and buying a new outfit, but it is an easy way to add money to your retirement. Keep in mind the lifestyle you want to live during your retirement as motivation to save any extra money that you can.
- Save your tax refund. Each year we get a large chunk of money back from Uncle Sam. We have taken all the deductions we can without raising a red flag with the IRS, so we just live with the refund. This makes it easy to set aside a large amount for retirement.
- Save your extra paychecks. Many people are paid biweekly. This means that twice a year you receive three paychecks in a month rather than two. We use these "extra" paychecks as opportunities to boost our savings.
It can be difficult to save money for retirement. For many people retirement is literally decades away. It is hard to really imagine saving enough money to support yourself for twenty or thirty years of retirement. But it is always better to plan for something and do the best you can to prepare. So take some time to figure out how much retirement savings you need and starting setting money aside now. The earlier the better. Use the ideas here to help you boost your retirement account as much as you possibly can.