Have Less Than $100K Saved for Retirement? Here’s How To Catch Up
It can be hard during a traditional calendar year to make saving for retirement a priority. It has been especially difficult since the pandemic with unexpected circumstances forcing many to deplete their savings. Although it’s tempting to focus solely on the here and now, you don’t want to forget about your future retirement.
If you don’t have a large nest egg, the data shows that you aren’t alone. A recent GOBankingRates survey found that the majority of Americans (70%) have less than $100K saved for retirement. To break that figure down, 23% of Americans have empty retirement accounts, 29% have less than $20K, and 18% have between $20K and $100K.
If you’re among the 30% of Americans who’ve already socked away $100K or more, you’re on your way to fully funding your retirement! And if you’re not, don’t worry! Whether you’re starting from scratch or continuing good habits, it’s important to fill your coffers before you reaching retiring age. Here are a few ways to catch up on your retirement savings.
1. Start Today
Do you have an extra dollar or 2 to spare this week? Maybe an extra $50 this month? Instead of spending the money or letting it sit in the bank, you can use that to start your retirement savings. You can sign up for an IRA online or discuss your options with a trusted financial advisor. The important thing is that you’re contributing to your savings and earning interest. Don’t wait to start planning. The longer you wait to start, the further behind you’ll be and the harder it’ll be to catch up.
2. Budget More Towards Savings
If you’re not currently working with a budget, try giving it a shot. Budgeting allows you to see how much money you’re making and spending so that you can better manage your finances. A simple method recommended by financial experts is the 50-30-20 rule. Instead of breaking down your spending habits into different categories, this method is simple. Each paycheck (after taxes) should be divided into 3 parts – 50% of that check goes to needs, 30% goes to wants, and 20% goes to savings or paying off debts. If that budgeting style doesn’t work for you, there are a variety of other methods you can try.
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3. Put Away Any Extra Cash
Do you have a birthday coming up? Some special events and holidays tend to encourage people to give. If you find yourself receiving a tidy sum of money either as a gift or a return on your taxes, you should consider saving a portion, if not all, of it. Save the money for a rainy day. Put the extra cash in a high yield savings account, or better yet, an IRA or Roth IRA. Any money that you’re able to add to your retirement savings is more money you can earn interest on.
4. Take Advantage of 401(k) Matching Programs
If your employer offers to match a certain percentage of your 401(k) contributions, don’t leave that money on the table. Contribute to those accounts and maximize on how much your employer will add. If they will match up to 6% of your salary, make sure to save 6%. The most common 401(k) match is 3%-4% of your pay. Some companies will match as much as 10%, while others don’t offer any match programs at all. Check with your employer if you’re not sure they have a program.
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