Friday , 29 March 2024

20 Ways to Increase Your Savings and Retire Rich

…Daydreaming about retirement is easy, but saving for it, however, takes time and effort — and is something a lot of Americans struggle with –  but there are strategies that can help make the process easier. Here are 20 ways to pad your bank account before it’s time to retire.

The original article (by Cameron Huddleston) has been edited here by munKNEE.com for length (…) and clarity ([ ])

1. Eliminate Unnecessary Expenses

…Review bank statements for any unnecessary spending…You might uncover certain expenses for things you are not even using, such as club memberships, subscriptions, automatic charges for services you’ve never used…

[Also read: 6 Guilty Pleasures That Will Destroy Your Budget]

2. Start Saving Early

…Start saving money as soon as you earn it. Thanks to the power of compound interest, even small monthly contributions to a retirement account can grow over time to a sizable nest egg. The more time you have, the more your money will grow. For example, if someone starts saving $350 a month at age 25, increases that amount by 2.5% each year and earns 7% annually, he will have about $1.4 million by age 67. If he waits until age 35 to start saving, however, he will only have about $654,000 by age 67.

[Also read:

3. Don’t Let Saving Be a Choice

Have contributions to your 401k or other retirement account automatically withdrawn each month or from every paycheck which eliminates the chance that you stop putting money into your retirement accounts…

4. Save at Least 10% Annually

…The median savings rate among Americans is 8.5% but many retirement experts recommend setting aside at least 10% — ideally, 15% — to live comfortably in retirement. If you can’t set aside that much when you’re starting out, start small and increase your savings rate over time, such as by 1% every year.

5. Take Advantage of Your Employer Match

If your employer matches contributions you make to your workplace retirement plan, make sure you’re contributing enough to get the full match. Otherwise, you’re losing out on free money. The most common type of match is 50 cents for every $1 contributed by an employee up to a certain percentage of pay — typically 6%.

6. Save Your Raise — Don’t Spend It

…Put any extra you get from a raise into your retirement account rather than your bank account, i.e., try not to expand your lifestyle if your salary grows…then you won’t have to sacrifice your standard of living in retirement.

[Read: How To Avoid Lifestyle Creep & Create A System For Financial Success

7. Make Catch-Up Contributions

Use catch-up contributions to catch up on retirement savings. In 2018, you can add an extra $6,000 to a 401k, 403b or 457 plan if you’re 50 or older. You can also boost IRA contributions by $1,000.

8. Don’t Fear Risk

For each stage of life, you should invest with as much risk as you can tolerate. Ideally, you should be putting most of your retirement savings into stock mutual funds when you’re in your 20s and 30s. As you get closer to retirement age, you can lower your risk by investing in fixed-income assets, such as bond funds, in addition to stocks or…a target-date fund that will automatically adjust your allocation of stocks and bonds as you approach retirement.

9. Diversify Your Investments

Diversify your portfolio with a mix of stocks and bonds — or better yet, mutual funds.

10. Watch Out for High Fees

If you invest in mutual funds, make sure high fees aren’t eating into your returns. If fees and expenses on your account are 1.5%, your balance will be 28% lower at retirement than if the fees had been 0.50%, according to the U.S. Department of Labor. The investments offered in your 401k likely have varying fees, though, so consider switching to lower-fee savings options.

11. Stay the Course

You might think you’re protecting your nest egg by pulling your money out of the stock market during downturns but what you’re really doing is locking in losses by selling when stocks are down and missing out on opportunities for your investments to rebound…The takeaway: Don’t let emotions kill your investments.

12. Invest in a Roth IRA for Tax-Free Retirement Income

Contributing to a Roth IRA is a great way to pool money you can access tax-free in retirement. You can’t do the same with other retirement vehicles, like a traditional IRA or 401k.

13. Invest in Income-Generating Real Estate

Buy income-generating real estate. The key is to purchase and finance it carefully…

14. Get a Side Gig

Get a second job doing freelance work or turning a hobby into a money-making venture and funnel that extra cash into retirement savings. If your side gig is considered self-employment, you might be able to make contributions to a solo 401k or a Simplified Employee Pension plan, and those contributions could be tax deductible. You can set up either type of account through an investment firm with low fees, such as Fidelity or Charles Schwab.

[Also read:

15. Downsize Before Retirement

If you have a bigger home than you need, don’t wait until retirement to downsize…”Owning” a big house often comes with a fat mortgage payment and high insurance, utility and maintenance costs and all these things take away from your savings capability…

16. Relocate for a Lower Cost of Living Locale

Living abroad or moving to a state with a low cost of living is one way to keep expenses down in retirement [and] if you move while you’re still working, you can beef up your savings to have an even richer retirement…

[Also read:  

17. Find an Employer With a Better Retirement Plan

An employer that offers a 401k match is good, but one that provides a pension that creates a lifetime stream of income in retirement is even better…Although many employers have shifted away from these so-called defined benefit plans, 20 percent of Fortune 500 companies still offer them to new hires…[and] a job with a pension plan can actually beat one with a slightly higher salary…[so,] if you’re short on retirement, that’s a smart way to go…

[Also read:

18. Don’t Keep Up With the Joneses

Establish a lifestyle where you put savings first…and find a group of friends who also value saving so you don’t feel pressured to spend…[Trying] to keep up with the Joneses will likely hurt your chances of being rich in retirement.

[Also read:

19. Get Professional Help

Hiring a financial advisor doesn’t guarantee you’ll retire rich, but it can increase your chances. The right professional can help you create a comprehensive financial plan and stick to it…

[Also read:

20. Don’t Gamble on Your Future

Buying lottery tickets isn’t a trick to retiring rich — neither is ignoring your retirement savings. Rather than hope you hit it big someday, establish a strategy to save for retirement. Come your golden years, you’ll be set with retirement savings that last.

Scroll to very bottom of page & add your comments on this article. We want to share what you have to say!

Related Articles From the munKNEE Vault:

1. Compound Interest Is Absolutely Critical To Growing Your Wealth – Here’s Why

Albert Einstein once said that compound interest is the eighth wonder of the world yet, sadly, many people do not fully understand the power behind it. If they did, they might make smarter financial choices and see their finances improve almost immediately. In this post, I’ll walk you through the basics of compound interest and show you why you need to start taking advantage of its amazing power.

2. Compound Interest: “the eighth wonder of the world” – Here’s Why

Today’s infographic…focuses on explaining the power of compound interest – an idea that is absolutely essential to understand. Indeed, the power of compound interest is so compelling that it’s been often called the “eighth wonder of the world”. Find out why this concept is so fundamental to personal finance in the following infographic:

3. Saving For Retirement Today Will Compound Your Returns Tomorrow

When should you start saving for retirement? Financial advisors say it is never too early to drop a chunk of your monthly paycheck into a retirement account – and ideally in your 20s when you start earning a steady paycheck. The compounding effect of money can be very powerful especially over a long period.

4. Want To Retire In Europe? Here Are Some Of the Cheapest Cities

If you’ve had your heart set on moving to Europe there are still history-steeped places there where you can experience old-world charm on a limited budget. Here are some of the cheapest cities you can settle down in across various European countries.

5. 9 Retirement Hotspots That Are Cheaper Now Than Ever Before

Financial considerations are the biggest factor for many people when deciding where they want to enjoy their retirement years. As the strength of the dollar continues its hold against other currencies, it’s providing us with far more purchasing clout when it comes to buying other currencies. This in turn is helping to make many destinations even more affordable to U.S. citizens who are looking to decamp to foreign locales. Here are nine retirement hot spots that are cheaper than you thought.

6. 5 Places to Retire and Rent for Less Than $500 Per Month

One way to approach your search for the ideal overseas retirement haven is to focus on choices where housing is cheap. Below I present five such places for your consideration.

7. Is One Of These States Or Countries the Ultimate Retirement Spot For You?

Retiring does not mean retiring from life. No, for many people, it’s the beginning of a new life but how do you decide where to retire? It’s a big question that requires research and we’ve done the hard lifting for you. This article puts together a comprehensive list of the best places to retire depending on your financial status, which usually the biggest factor for most people.

8. 6 Guilty Pleasures That Will Destroy Your Budget

When it comes to guilty pleasures, we all have a few. Some vices are fine to indulge in every once in a while — like that weekly caramel latte. However, splurging too much on these vices can rob our budget, and in some cases, our health. Here are six guilty pleasures that are destroying your budget.

9. Certain Credit Cards Can Save You Tens of Thousands of Dollars Over Time vs. Paying With Cash

If you choose cash over credit, it will cost you tens of thousands of dollars over the long term. Here’s why.

10. 5 Critical Personal Finance Tips To Profit From

By following the 5 most critical personal finance tips outlined below, you are going to see a major improvement in your finances and achieve wealth that you didn’t think was possible. Let’s get started!

11. Stop The Rising Cost Of Living! Here’s How

Many times we think that the rising cost of living is a part of life but the truth is there are most likely things you are doing to artificially increase your cost of living. With a few small changes, you can lower your cost of living and start saving more money. Below are “tricks” on how to stop the rising cost of living:

12. How To Avoid Lifestyle Creep & Create A System For Financial Success 

Most people get some kind of raise each year. They earn a little more than they did in the year before. Without a plan to save that raise, it’s very easy to use it up by adding a few luxuries or consumption to your regular spending.

13. 401k Vesting: 4 Critical Things You Need To Know

Contributing to your 401k plan is critical for affording your retirement. In many cases you also get an employer match. Unfortunately, that money is not always yours right away but 401k vesting schedules allow this become a possibility. So what are 401k vesting schedules? How do they work? This article walks you through the ins and outs of 401k vesting schedules so you won’t be surprised when you encounter them.

14. 7 Things You Should Know About Your 401(k) Match

When a company matches the money you contribute to your 401(k) plan, up to a certain amount, these matching funds can be a very powerful way to save money over time for retirement and, as such, it’s important to take advantage of a company’s full 401(k) match if you can. Every company has different policies regarding these matching funds, and things can often be confusing for new investors. Here are some key things to know.

15. Your 401(k) Plan Is Your Most Powerful Investment Account – Here’s Why

What makes your 401(k) plan the best place to invest your money for the long term? In this post I will show you all of the reasons why this type of investment account has the greatest impact on the growth of your money.

16. 6 Arguments For Maxing Out Your 401(k) Contribution

Maxing out your 401(k) is often the best way to accumulate a healthy sum for retirement, and there are great tax benefits as well…Consider these 6 argument.

17. 7 Things Financial Advisers Wish You Knew About Retirement

We asked financial advisers for some of the most important ideas they wish their clients understood when it comes to money, retirement, and the future [and here are 7 of the most important].

18. 5 Mistakes Investors Make By Going Solo On Their Retirement

Many Americans have taken it upon themselves to do the vast majority of retirement planning without the help of a financial advisor. While that is perfectly fine and legal, it is not entirely wise considering the long-term margin for error. Plenty of things can go wrong, and they do, often leaving investors lost and confused about what they can do to better their circumstances. There are 5 major errors committed by solo investors that can greatly impact their ability to maintain wealth throughout their retirement. Here they are!

19. Need Some Extra Money? Here Are Some “Side Gigs” To Consider

Side gigs are not exactly second jobs, because they come with a lot more flexibility and leave you in control of your hours and commitment but they can still be invaluable sources of income when you’re really in a pinch. If you’re ready to start bringing in some extra money, quickly, here are some great places to start.

20. Roth IRA: 4 Benefits In Addition To Just Saving For Retirement

You hear a lot about how great a Roth IRA is for saving for your retirement – after all, who wouldn’t want their money to grow tax-free and be able to withdraw it tax-free too – but there are some additional benefits to investing in a Roth IRA that exceeds just saving for retirement…[and this article] highlights 4…

21. Which Gold/Silver Bullion Assets are Permitted in Your IRA & Roth 401(k)?

Some physical gold, silver, platinum and palladium bullion assets, in addition to traditional paper assets, can be part of your Individual Retirement Account (IRA) or Roth account and they can be bought and sold with no tax consequence until you move money out of the account. [This short article reveals just which bullion assets can, and cannot, be included.] Words: 573

22. Don’t Obsess About “Keeping Up With the Joneses” – Outsmart Them Instead! Here’s How!

If you are hoping to live a happier, fulfilled life without money stress, you may not want to obsess with the Joneses. You can outsmart them by making better choices. HERE are several ways you can likely beat the Joneses and improve your financial health.