Time has a way of creeping up on us—doesn’t it? If you didn’t start saving for retirement until later in life, you’re not alone. Many Americans struggle to prioritize retirement saving when they have seemed more urgent bills like credit cards, student loans, and the cost of starting (and raising) a family. Don’t worry—you may be able to get caught up on your retirement plan with a few tweaks.
Here are five powerful, but manageable, ways to get started.
1. Take advantage of company benefits
Saving for retirement can be tough when you’re on your own. Your employer may be able to help. Many companies offer a matching program that can accelerate your 401(k) savings—usually matching between 50–100 percent—up to a certain amount.
2. Break it down
Successful saving happens when you turn it into a habit. This can be challenging on a tight budget, but you don’t have to do it all at once. Start with a manageable amount, then gradually bump up your contributions. After you’ve contributed enough to get the highest match from your company, increase your contribution by 1 percent every six to twelve months. Pretty soon, you’ll be reaching those savings goals.
3. Wait to retire … just a little
For each year you delay taking Social Security beyond your full retirement age, your payment increases by about 8 percent. And, thanks to compound interest, it also gives your savings more time to grow. Here’s an example of how it works: If you have saved $830,000 when you reach your full retirement age and continue to work for another three years, your savings could grow to almost $1.02 million (assuming you’re earning a 7 percent return). That’s about a 22 percent increase!
4. Spread out risk
Taking risks with your money can be scary, but sometimes risk equals reward. Historically, the stock market has returned an average of 10 percent. But it’s always changing. If you still feel nervous, further diversify your portfolio across a variety of stocks and industries. Then, if you lose in one area, your other investments can help to compensate.
5. Talk to an expert
There are so many questions to answer when it comes to retirement planning—it can be a bit overwhelming. How much do you need to save to cover healthcare costs? Are you on track to reach your long-term goals? Do you have a diverse portfolio that works for you? A financial advisor can help you clarify your goals, track your progress and give you peace of mind to achieve your financial plan.