Top Strategies for Retirement Savings

Even while 31% of non-retirees believed their retirement funds were not on track for success and 28% of non-retirees had no retirement savings in 2022, retirement still looms big over most Americans.

According to a 2023 BankRate poll, there are several reasons why Americans put off saving for retirement. The most significant is financial: many Americans, especially the younger ones, find it difficult or impossible to save money for retirement due to issues like inflation, student loan debt, unemployment, and lack of income. Poor spending habits and a lack of knowledge about where to begin are additional causes.

Whatever the cause, solving the issue is the wise course of action. Your retirement goals can be achieved with the assistance of Empower’s team of specialists. As soon as you get going, you may start strengthening your savings and take pleasure in seeing your retirement funds increase.

Six Retirement Savings Suggestions

Every effective plan begins with specific goals. Here are six suggestions to get you started with saving for the time when you don’t have a job.

Establish your retirement objectives

You will still need to budget for both fixed and discretionary spending after retirement. Medical expenses, which often increase with age, transportation expenses, housing and food expenditures, taxes, and insurance are some of the former. The latter can encompass a wide range of recreational activities, such as dining out, pastimes, sports, travel, travel-related presents, and more.

Prioritizing your needs is important, but you should also budget for pleasurable activities because nobody wants to live a life devoid of them. You have to determine what the balance is.

Start right now

You will be in a better position the earlier you begin saving. For instance, if you start contributing $5,000 year to an individual retirement account (IRA) at age 30 and earn 5% annually, you will have $603,999 at age 70, based on this IRA calculator. Starting at fifty years of age will only get you to $165,330.

You can optimize the benefits of compound interest, which is accrued on your investment principal and any prior interest received, by setting aside money for a long time. It significantly increases income. You might also look for assets with better yields and increase the amount of your regular contributions, among other things.

Make wise investing choices

Always invest in the 401(k) plan offered by your employer, if you have the choice. You can either accomplish this on your own or get assistance from a specialist. The best returns can come from a hands-on approach, provided that you or the person assisting you is competent enough to make investing judgments.

You should closely monitor the following advice if company officers are managing your 401(k) and you have no say over the investments.

Fund additional retirement accounts and maximize your 401(k)

One of the best things about 401(k) plans is that your company will frequently match your contributions. You should always make sure you fulfill all requirements in order to benefit from this, as it is essentially free money.

There are contribution caps ($23,000 for 2024, with a $7,500 catch-up contribution for individuals 50 and over), but you can still increase the amount you contribute to your overall retirement savings even if you save the IRS-mandated maximum.

These have capped contributions as well ($7,000 for 2024 plus an extra $1,000 catch-up if you’re over 50). An excellent investing option is a SEP-IRA if you own your own business or are self-employed. It contains contribution caps as well (the lower of $69,000 in 2024 or 25% of the employee’s pay). On its website, the IRS provides a comprehensive list of retirement plans.

Set up an automated savings account

For employer-sponsored plans, setting up regular automatic payments into your retirement accounts is normal procedure. This also applies to accounts that you have independently opened. Be aware that a lot of apps that help you save money, including Rakuten and Simplifi, have automated functionality.

Consistently check the conditions of your account

At least once a year, review your retirement accounts and determine if you can afford to contribute extra. Maybe you gave up a pricey habit or activity, or you received a raise. If so, think about contributing a portion of the cash—possibly up to half—to a retirement plan account.

If you are unable to save more, at least maintain the level of your current contributions. Despite a volatile market or a setback in your profession, it will be beneficial to you.