Our culture looks toward January 1st as a breath of fresh air, a chance to start over, to resolve to do better than we’ve done in the past. Thus the New Year always brings a rush of resolutions, the top two being to quit smoking and to get into better physical shape.
We here at Billshark like to encourage our clients to adopt this attitude. Now is the time to sit down, review your financial shape, and begin to look at ways to improve it. One good place to start is with your retirement portfolio.
If yours is like most people’s, you don’t have nearly enough on which to retire comfortably. The worst possible response to that situation is to throw up your hands and utter those fateful words, “Well, it’s too late now. There’s nothing I can do about it.”
There’s plenty you can do about it, no matter how close you are to retirement age. Start by setting goals—small, in the beginning, then larger as you see how much bigger your nest egg is growing. Try these 10 strategies first.
1. Consolidate your retirement accounts
If you’ve had more than one employer during your career, you probably have retirement accounts with each of them. Consolidating these various accounts will help you see how much you have, and how much more you need to save. Billshark can help you sort this out.
2. Save $10 more per paycheck
Can you do that? Just $10? With bi-weekly pay periods, compounded annually over 40 years at just 6%, that $10 will yield $2,674.
3. Invest any windfalls you get
Tax refund? Bonus? Inheritance? Pretend this money never happened. Stash it into your retirement account without looking back. If that’s too painful, at least stash half, and reward yourself with the other half.
4. Get a raise
Easier said than done, yes, but either ask for one, or retrain for one. Go back to school, take classes, talk to your boss to see what you need to do to qualify for a raise this year. If you don’t see a path toward a raise in your current job, think about switching to another one. Or to another career.
5. Invest your raise
If you’re lucky enough to get a raise in 2017, pretend you didn’t. Direct it immediately into your retirement funds.
6. Max out your 401(k)
You should be placing at least enough into your 401(k) account that you receive every dime of your employer’s matching contribution. If you can contribute more than that, do so.
7. Pick up a few bucks on the side
Maybe you really do have too much month left at the end of the money, and there just isn’t enough to set aside for retirement. But most of us have skills, hobbies or interests that we could turn into a lucrative sideline. And in these days of the Internet, it’s easier than ever to find buyers for whatever you’re selling.
8. Increase your tax savings
You don’t need fancy accountants to help you save on your taxes. Just be sure you’re doing everything you can with the big three: a 401(k) or IRA lets you defer taxes on earned income; a Roth account allows you to withdraw money at retirement entirely tax free; and a health savings account (HSA) lets you set aside pre-tax money to pay for various medical needs throughout the year.
9. Divert debt payments
Once you’ve paid off your credit card(s), student loans or other such debts, the smartest thing you can do with the payments you were making is to earmark them for your retirement savings.
10. Don’t forget an emergency fund
If your car breaks down or your washing machine blows up, you’ll need money to repair/replace these items so that you aren’t dipping into your retirement savings for quick cash. In addition, the rule of thumb is to have six months’ income saved in case of job loss. A traditional mutual fund or brokerage account is the best route for these funds. We here at Billshark are ideally positioned to help you sort through your financial option