Ideally, you would have funded your retirement savings early. Of course, sometimes life has its way and people fall behind. It becomes harder in this time of pandemic, with job losses and income uncertainty. Having said that, it is not too late to turn your situation around. Following are some ways for you get over this hurdle and catch up on your retirement savings fast.
- Review your budget.
The easiest place to find extra cash is within your budget. Remove any expense that is not giving you the fullest value of your dollar. There is always something that you can reduce or cut temporarily just until you meet your savings goals. Check your categories and see if you have overlooked anything.
- Make catch-up contributions on your 401(k).
This option is available to people over 50. The base limit for contributions to workplace retirement accounts is $19,500. Once you hit 50, you can contribute an extra $6,500 per year to pad your account. If you have an IRA, you can add an extra $1,000 to the usual $6,000 contributions to catch up.
Apart from your 401(k), you can also open a health savings account. It gets even better if your employer will match your contributions. Maximizing your IRA contributions is another good option. In case you have extra money after, invest it in a taxable account to maximize the benefits.
- Earn extra income.
Taking on more hours of work is not an exciting thought for anyone but you must be willing to make sacrifices if you have neglected your retirement savings. Some good ways to add to your income include changing employers to get a bump in salary, updating your skills to earn a raise in your same company, and finding a part-time job.
- Minimize spending.
This is the most important change you can make. Not only will your cash on hand increase, you will also train yourself to live and thrive with less. If you are able to minimize your spending, you are likely to enjoy your retirement life more.