Making Up for Lost Time: 5 Tips for Catching Up on Retirement
It’s a fact of life! Things don’t always go the way you planned. And your retirement savings are no exception.
Despite our best intentions, circumstances beyond our control may arise that prevent us from fulfilling our commitments to our retirement plan.
I get that, but you should know that there are a number of strategies that can help you make up for lost time and get you back on track. Read on for some tips for bringing your retirement plan back up to par!
Pay off that debt!
First things first. Before you can begin to effectively and efficiently bring your retirement plan up to speed, you’ve got to get rid of that debt. This is particularly true if that debt has high interest rates. By not paying off your debts, you may be doubling your losses by contributing to your retirement accounts. The longer the debt goes unpaid, the more it costs you, and it could really start to chip away at your nest egg if you’re not careful. So, make a plan and pay it off!
Max out contributions to your 401(k).
Once you hit 50, your tax-advantaged retirement savings accounts take on higher annual contribution limits. In 2016, an additional $6,000 may be deposited in your 401(k), as well as an extra $1,000 into your IRA. If you’re able, make the maximum contributions into your retirement accounts. This will help you recover some of you lost savings potential before you retire.
Get on board with employer match programs.
Like the above, you’ll want to take advantage of your employer’s contribution match program, if they offer one, by maxing out your contribution to your employer-sponsored saving account. This is basically free money for your retirement!
Downsize your home.
If the kids are gone, and you find yourself paying for a home that far exceeds your needs, then you may consider downsizing your home as a way to infuse your retirement savings with some extra funds. Any money left over from the sale of your house could be invested as a compliment to your retirement accounts.
Work past your expected retirement age.
This might not be the most appealing approach to making up for lost time, but it’s nice to know that you have the option if it comes to that. Taking a few more years to work (and save for retirement) can really give you some savings momentum for when you finally do retire. Additionally, with each year that you defer formally electing retirement, your Social Security benefit increases by 8%…and that’s a risk-free 8%!
So while life may have seemingly distorted your retirement plans, following a few of the above referenced suggestions could bring your golden years back into focus.