In order to avoid stress and worry that come in the 40s and 50s from lack of planning (and working your plan), here are 5 ways you ca n jumpstart your retirement savings after 30.
#1 Have a Plan for Retirement
The thinking that you can afford to put it off may have serious consequences later on.
It’s never too early to get clear on when you will retire and how much you’ll need for the lifestyle you desire.
Saving for retirement is a long game. The sooner you start, the better your chances are of ending ahead, or at least on track.
Check out our retirement calculator to see how much you’ll need at retirement, and calculate how professional help may improve your future retirement nest egg.
If you’re stuck, we recommend seeking third-party advice as soon as possible.
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Your answers might change as you near retirement, but these help get a plan in place now and on the path to reaching your goals.
#2 Open and Fund an IRA
If you’ve changed employers in the past and had a 401(k) with them, it’s likely you have some retirement savings accumulated. If the balance is over $5,000, you can take your 401(k) plan(s) from previous employers and roll them over into an IRA. This will make tracking retirement spending much easier.
If your old plan balance is between $1,000 and $5,000 and the company is forcing you out, they must help you set up an IRA.
However, if your balance is under $1,000, the company can issue you a check and force you out of their plan.
If you decide to fund an IRA or roll over an older 401(k) into an IRA, make sure you select a plan with the lowest fees. Or seek third-party advice to make the best rollover decision possible.
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#3 Try to Maximize Annual Contribution Limits
T he annual contribution limit has been raised to $19,000 for 2019 for employees under 50 who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan. This is $500 over 2018.
The maximum contribution for an IRA for people under 50 is $6,000–up $500 from 2018.
How much you can realistically contribute to your 401(k) depends on how much you earn and the amount of debt you carry, among other factors. Even if it’s a stretch, do what you can to save as close to the 401(k) and/or IRA contribution limits as possible.
Even if this means making cuts in monthly spending. It’s amazing how cutting daily lunches out at work or mowing your own yard can save each month.
If you want t o jumpstart your savings after 30, c ontribute at least the minimum of what your company will match because it’s basically FREE mon ey to you.
And, depending on what your company matches, it may double the amount of what you’re already saving.
Also, anytime you get a raise, reevaluate your monthly retirement savings contributions and increase the amount saved.
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Taking these steps now may potentially have a big impact on your income at retirement and prevent you from having to pick up additional jobs to make ends meet.
Focus on your financial future now, and your future self will thank you!
#4 Build an Emergency Fund
Having an emergency fund not only helps you cover unexpected expenses without stressing, but it also prevents going into debt if you have to use a credit card or borrow the money. And staying out of debt is one of the keys to reaching your financial goals for retirement as well as building wealth .
Doing this may help you si gnificantly jumpstart your retirement savings after 30.
You might already be saving for retirement, but are you funding a rainy-day fund as well? If not, you should start now.
Experts advise people should save 10-15% of their income. If you’re putting 8% of your income into your 401(k) or other workplace retirement account, you should take the remaining 2-7% and fund a savings account for emergencies until the account is funded.
If you’re already saving 15% of your income, then find a way to put an additional 1-5% into your cash reserves.
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#5 Get Expert Advice
A recent Morningstar report shows that participants wh o received expert guidance had as much as 40% more income during retirement versus those who received no help at all . ¹
Even if you have a couple thousand dollars saved, it’s worth finding an advisor who can help guide you.
Check out our retirement calculator to see how much you may have at retirement and calculate how professional help may improve your future retirement income.
If you’d like more tips on how to have more income at retirement, download our guide on How to Supercharge Your 401(k) Performance Today .
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