Are you doing everything you can to cater towards your nest egg before it hatches?
You may think you are, but chances are there’s a few things you might have missed out on in terms of setting aside enough cash for the future.
No need to worry though… I’ve listed 4 simple ways for you to get your retirement savings where they need to be.
First, opt-in for the employer match.
Many employer-based retirement plans, such as 401(k)s and 403(k)s, give you the option to match contributions up to a certain percent.
Let’s say you choose the 100% of the first 6% option…
If your annual salary is $50,000 and you contribute 6%, which is the equivalent of $3,000, then your employer would add an additional $3,000 worth of funds to your retirement program after one year.
It’s essentially FREE MONEY!
This one is probably a given, but another way-to-save is to take advantage of compounding interest.
Compounding interest is a fancy term used to describe how money grows on its own over time. It’s basically interest on interest.
For example, if you have a savings account or investment that yields 5% of interest per year, then a $50,000 balance would grow an extra $2,500 just for letting it collect dust over the span of those 12 months.
Obviously the idea is to add recurring increments to your account, but even if you never put another penny towards the initial $50,000 investment, you’d still be up more than $200k after 30 years!
In this case, it quite literally pays to save…
It’s also important to note that your retirement savings are universal, at least for the most part.
In other words, you don’t have to go back to square one every time you switch jobs.
Whatever earnings you’ve accumulated from a previous employer can be transferred into a new 401(k) type plan or deposited into an IRA.
The choice is yours, just avoid going to cash if you’re really trying to beef up your savings.
The final piece of advice I have to send your way is to be aware of the tax advantages you have at your disposal.
It’s safe to say that many employer-sponsored retirement plans don’t require an upfront tax payment going in, but any withdraws you make after the fact are.
You can easily get around this via Roth IRAs though as there are no taxes on withdraws.
Well, there you have it. These are just 4 simple tips to keep in mind if your goal is to make the most out of your nest egg.
Feel free to pair any of these moneysaving strategies with your investments as you move forward so you can build your retirement funds to their full potential.