Take Advantage of these Retirement Savings Hacks.
You aren’t alone if your answer to this question is an emphatic “No,” or if you are simply not quite sure. Saving for retirement is a major challenge for many people these days and we have pretty low retirement preparedness levels across the board in our country.
Sometimes we spend more time and energy avoiding our finances than is necessary. Instead of spinning our wheels and doing the same things to get the same old results, maybe we should redirect our time and resources to more meaningful actions that could become difference makers.
In the spirit of trying to find ways to make our financial lives seem a little less complicated, let’s take a look at some easy life hacks that can help you build up your retirement savings (and your own sense of retirement confidence):
Put Your Savings on Autopilot and Pay Yourself First
Make saving for retirement easy. It would be nice if we all made rational decisions with our money. But there is a pretty big knowing-doing gap. That’s why it’s important to automate smart saving behaviors whenever possible. Paying yourself first means that you don’t give yourself a chance to make your money disappear in all the wrong places.
Participating in a retirement plan at work (401k, 403b, 457, etc.) is an obvious place to start. Contributions come directly out of your pay. Once you determine how much of your income you want to contribute it is easy to set and forget your savings. Other pre-tax saving vehicles such as health savings accounts (HSA) may also be used to automate the process of saving for retirement.
You can take the same approach when saving in an Individual Retirement Account(IRA) by setting up automatic contributions through your paycheck or directly from your bank account after you’ve been paid.
There are other ways to make saving easy. One method is to take advantage of a contribution rate escalator tool if offered by your retirement plan provider.
These small automatic increases to how much you save can help you gradually raise your retirement plan contributions over time.
Saving for short-term emergencies is another part of a solid financial foundation. Before ramping up your retirement savings above any employer-provided match, be sure you have some emergency savings in place. And you guessed it…you should also make saving in your safety net account automatic. In addition to setting up direct transfers to savings once you are paid, consider using a debit card that rounds up your purchases and puts that money in a savings account separate from your day to day checking account for living expenses. Another tip to remember when you make cash purchases is to put your extra change in an old-school piggy bank or jar. At the end of the year, the extra savings can go into your IRA.