Bethel Park, PA – Most financial professionals agree that people should save as much as they can, or at least 10-15% of their salary, for their golden years. If they’re not saving that amount, or need more to achieve an ideal retirement, how can people add to their savings without drastically changing their lifestyle today? Jonathan D. Martin, Financial Advisor with Ameriprise Financial Services, provides eight ways to potentially make a positive difference for retirement over the long term.
1. Commit to saving for retirement.
If you’ve started putting money away for retirement, stick with it. You’ll likely face situations that can disrupt your steady stream of savings, such as taking a new job, moving, or paying unexpected medical bills. Your expenses are bound to move up and down, but missing out on months or years of savings can have a significant impact on your total nest egg – especially if you’re far from retirement and time for compounding interest is on your side.
2. Create a budget – and stick to it.
Make retirement a priority in your monthly budget. Start by looking at your recent spending and identify ways to allocate more money to your retirement account. Do you have a recurring subscription, gym membership, or cable package you don’t use? Consider eliminating one unnecessary expense and put that money aside instead. Next, establish a clear savings goal for future months. Having a goal could help you reign in impulse purchases because you’ll be focused on what the money could do for you down the road.
3. Take advantage of your 401(k) match.
Don’t miss out if your company provides matching contributions when you defer income into your workplace retirement plan. For example, if your employer offers to match the equivalent of three percent of your income, consider deferring at least three percent of your income into the plan. In effect, you’ll double your money even before it is invested.
4. Be smart about taxes.
A high percentage of Americans receive a sizable tax refund each year. If that describes you, consider investing your refund in your workplace retirement plan or an Individual Retirement Account (IRA). If you’re tempted to spend the money on something today, think about how much further your refund will go in retirement once it’s given the chance to grow over time. On the flip side, if you pay a substantial amount at tax time, make sure you’re approaching your tax liability in the most strategic way possible. Talk with a professional about your unique situation in the upcoming tax season.
5. Increase savings once you’re an empty nester.
Chances are that your expenses will decrease once your children are financially independent. Earmark the money you once spent on hockey gear, your kids’ health insurance or college tuition toward your golden years. While it can be tempting to remodel the kitchen or take a parents-only cruise with the additional cash, financial security in retirement should take priority.
6. Review your insurance policies.
Compare your auto and home insurance costs with other provider discounts based on your lifestyle or habits. Possible discounts include loyalty savings if you’ve been with the same provider for a while, paying your premium annually or semiannually, or for good grades if you have school-aged dependents.
7. Save salary increases
Make a commitment to your future self by allocating your year-end or performance bonus to retirement, if you’re fortunate enough to receive one. And the next time you earn a promotion or raise, think about increasing your workplace retirement savings accordingly. Even a one percent increase in the amount you defer to your 401(k) can make an impact on the size of your retirement nest egg.
8. Enlist professional guidance.
Meet with financial professionals in your local area to get their perspective on how you can increase your retirement savings. A financial advisor, tax planner, or an estate planner can review your financial situation and help you make smart choices for your life today and in your golden years.
Implementing even a handful of these ideas may help you generate additional cash you can apply toward your retirement savings. This money can make a significant difference over time in both the amount you have saved and your confidence in having enough money to last in retirement.
Jonathan D. Martin is a Financial Advisor with Ameriprise Financial Services, Inc. in Bethel Park, PA. Jonathan offers financial planning and asset management strategies. Contact Jonathan’s office at 412-831-6240 extension 202, located at 88 Fort Couch Road, Suite 210, Pittsburgh, PA 15241. Jonathan is licensed/registered to do business with U.S. residents only in the state of PA, OH, WV, CA, FL, IL, IN, NC, NJ, SC, and VA.