4 Ways to Increase Your Retirement Savings
When is the last time you checked in on your retirement plan? A month? A year? Can you even remember? If you can’t, you’re not alone. Many people find the idea of reviewing their retirement plan intimidating, so they put it off. You can’t avoid reviewing your plan forever, though, and there are some real benefits to doing so right now.
“Many people put off looking at their retirement plan because they think they don’t have the time or the expertise to do it effectively,” says Sandra Cullen, a Boston-based wealth management advisor with financial services company TIAA-CREF. “But there are some simple ways you can have a real, positive effect on your retirement plan without spending more than half an hour.”
So if you’re ready to revisit your retirement plan and see just how easy it is to enact positive change, give these ideas a try:
1. Take 10 minutes to visualize what your retirement looks like
Before you focus on the numbers, start with the dreams. What does retirement look like to you? Do you plan to travel the world or stay close to home so you can focus on hobbies and family? Statistically, retired households spend about 80 percent of what they did during their working years, but your retirement plans could affect that figure.
The TIAA-CREF Retirement Calculator can help you determine what retirement looks like for you. You can use the calculator to:
* Track your retirement savings.
* Determine how much money you may need now to generate an adequate paycheck later.
* Determine how long it will take you to reach your goal.
You can also adjust the calculator’s retirement date and/or amount until you find the figure that works for you.
2. Spend 5 minutes paying attention to the little things
If the calculator shows you’re not where you need to be in your retirement preparations, consider saving a little more each month. Even the smallest increase in your contribution can have a big impact when compounded with interest.
For example, by adding just $25 more a week to your contribution, you could earn an additional $46,000 in retirement savings over 20 years at 6 percent return.
3. Consider which IRA is right for you for 5 minutes
Traditional IRA or Roth IRA? They both have their benefits, but which is right for you? You can contribute $5,500 to your IRA annually, $6,500 if you’re 50 or older. Traditional IRAs are taxed when the money is withdrawn, while Roth donations are not tax deductible when you contribute. And, Roth IRAs have income limitations.
Still not sure which IRA is right for you? The online TIAA-CREF calculator can help you compare one with the other.
4. Analyze your risk tolerance for 10 minutes
Every investor has their own risk tolerance, and understanding yours is important when you’re trying to determine what investment plans are right for you. While investing aggressively could lead to higher returns in the long run, some investors don’t want to deal with the ups and downs along the way. On the other hand, a more conservative approach ensures your money will grow; that growth, however, may not keep pace with inflation.
Many investors opt for a mix of both, and TIAA-CREF’s Asset Allocation Evaluator tool can help you determine the right portfolio for you, based on your risk tolerance and financial needs.
By spending just 30 minutes and completing each of these steps, you can have a better understanding of where your retirement plan stands and what you can do to improve it. And this process has probably raised a few questions as well. To get your questions answered and find the information you need, it’s best to meet with a professional financial advisor. Your advisor can help you use the 30 minutes that you spend thinking about retirement to create the financial foundation for the 30 years you may enjoy in retirement.