The notion of retirement is a lot like the idea of driving a motorhome from coast to coast. At the beginning of your career journey, your goal of retirement seems remote and almost theoretical. By the time you arrive at your retirement destination, you’re surprised and delighted — but may wonder: “What happens now?”, how do you boost your retirement fund?
For many Americans, the answer to “what happens now” will depend on how well they planned for life after full-time employment.
Regrettably, most people set out on their career paths without considering the financial end-game. There is always a consequence to planning or the lack thereof. The end result of not considering the financial end-game? The average Baby Boomer has a retirement account savings between $37,000 and $104,000. That’s hardly enough to cover a very-basic cost of living, let alone pay for emergencies.
The likelihood is that Millennials and GenXer’s will plan better than their parents — especially if they observe the realities of reduced living that can occur.
Fortunately, it’s never too early or late to set aside retirement funds. Though experts recommend starting to save in your 20s, you can still reap benefits, even if you cannot begin saving until you are AARP eligible (50 years old). Consider any of the following strategies to get a head start on financing your golden years.
7 Tips to Help Boost Your Retirement Fund
1. Reconsider real estate.
Plenty of people avoid getting into real estate as a retirement vehicle because they don’t want to be flippers or landlords. What they don’t necessarily consider is another way to make real estate work — which is buying and selling wholesale properties.
If you don’t want to spend time surfing the web for the right property, some investors will provide you with a variety of wholesale houses for sale in your area.
Becoming a real estate wholesaler involves purchasing below-market value real estate and immediately reselling it. In other words, you don’t have to embark on a DIY fixer-upper adventure — unless you want to.
Rather, you resell the property to a buyer interested in snagging bargains, but one who needs help finding them. Though you’ll need a little money up front to get started, you may see a return on investment rapidly.
Do your homework first, of course, so you understand this short-term investment process. This can be a huge part to boost your retirement fund.
2. Set (and forget) CDs.
Do you have money set aside in a savings account? Even if it’s a minimal amount, such as $1,000, consider putting it into a certificate of deposit (CD.) Typically, CDs offer better interest rates than consumer savings programs. They also feature terms that can help you start to bulk out your savings without thinking about it.
CD rates change almost daily, so investigate the best ones on the market when you’re ready to invest. A key factor in choosing a CD will be how long your money will be locked up — be sure to ask about that.
CDs can be as short as a couple of months, or as long as several years. Some people like to have several CDs active at once to stagger their available cash. The longer you can afford to let a lender hold onto your cash, the higher your interest rate. You can often roll a CD automatically into another term if you don’t need the money when it matures.
If you can’t just “set and forget” (which is the best advice), you can ask the bank to let you know two weeks before a CD is about to roll-over so you can make a decision. That way, you’re never surprised not knowing your cash availability.
3. Become a budgeter.
Setting up a personal and household budget is an underrated way to save for retirement. Having a budget in a spreadsheet helps you track your incoming and outgoing money. The more you understand about your cash flow, the easier it is to make—and meet—goals.
A budget does not have to be a dirty word. Oh, that it was possible for all of us to just be spend-thrifts! A budget is a little like using the bathroom scales. The more you weigh yourself — the more likely you will lose weight (seriously, this has been studied). Pull out your computer and look at your spreadsheet often — you’ll save a lot more.
You may determine that you want to create a few spreadsheets related to short-term and long haul objectives.
These spreadsheets could include anything from preparing to buy a home to saving for your child’s education. Once you write out your goals, you’ll see them more clearly, and you’ll be able to work toward them more quickly.
It’s much easier to say “no” to an expensive latte every morning when you’re trying to realize fiscal goals.
4. Max out employer matches.
Does your employer offer a 401(k) plan? Will they match your contribution up to a certain amount or percentage? On average, company contributions hover around 4.3%. If you’re lowballing your contributions, you may be missing out on free money for your retirement.
Instead of putting as little as you can into your 401(k), put in at least what your employer will match. You’ll get double your investment without having to do anything extra. And best of all? Your 401(k) contributions will come out automatically.
The less you have to think about any contribution — the better.
5. Live off less.
Even if you’re sure you have zero wiggle room in your budget, check again. Many of us can shave off a few dollars here and there. The less you need to live today, the more you’ll have to live comfortably tomorrow. Cutting expenses can be one of the easiest ways to quickly boost your retirement fund.
Living off of less doesn’t mean you have to take radical steps, although some people have. Some have chosen to move to areas where their money can go farther. Some have taken remote work positions to cut down on their commute.
Again, you don’t have to follow in their footsteps. However, tracking your outgoing expenses for six weeks isn’t a bad idea. Having a record of your spending behaviors should help you see where you can cut back without feeling cut off.
6. Delay social security benefits.
Many people take social security benefits as soon as they’re eligible. Sometimes, this is necessary because they don’t have any savings. But if you can hold off until you’re 70 or older, you’ll get a sweet surprise: a higher check.
In fact, delaying your retirement benefits can increase the benefits you would receive at full age by quite a bit. A worker born after 1980 would currently earn 124% of their normal retirement benefits by holding off. That’s 24% more money each month, which could make a huge difference in your security.
7. Open an IRA account.
Do you think that only your employer (or your spouse’s employer) can offer you an IRA? Not so. You can open your own traditional or Roth IRA at any time. Look for a vehicle that offers tax-deductible contributions and an easy-to-follow online portal. Ideally, you want to be able to check on your investment any time, from anywhere.
If you’re not comfortable analyzing IRA choices on your own — think about working with a local financial advisor.
Yes, you’ll pay extra to work with experts. Nevertheless, you’ll have the security of knowing that you made an informed decision. And you’ll always have someone to turn to with questions.
Retirement can sneak up on you if you’re not careful. Make sure you’re not caught by surprise when you hit your 60th birthday and realize retiring is around the corner.
Remember: Putting aside a dollar a day for 40 years adds up to $14,600. So, all those little budgeting and planning adjustments will end up in a big payoff for you.
