We can’t really say it’s “never too late” to catch up on your retirement savings; if you’re 60 with little money set on the side, you will have hard time saving enough for a decent retirement. On the other hand, if you’re between 40 and 55 years old, there’s still a chance for you to have a great time in your golden years.
Here are a few tips to help you get your retirement savings back on track…
1. Pay off debts
First and foremost, if you have a high-interest debt — you’ll want to “deal” with it before putting a single penny into your retirement account. By “dealing” with it we don’t necessarily mean paying it off cause that may not be possible for everyone — though that’s a preferable thing to do.
See if you can refinance some of your loans with a better rate. Then come up with a plan to repay all your debts and take it from there. It won’t be easy, but with a right plan — which you should make for yourself — you can do it. Alternatively, you may want to speak with a debt attorney to see how they can help.
Related: 5-Step Process for Getting Out of Debt
2. Maximize contributions
If your employer is willing to match your 401K contributions and you haven’t used that opportunity in the past — now’s time to fix that to capitalize on the company’s policy. This is essentially free money if you take advantage of the opportunity.
In addition, you will also want to maximize your contributions whether your employer will match them or not. If you can’t put extra money into your 401K every month, try doing it a few times per year. Or at least once a year.
Another strategy to try is to put your “found money” — which includes all extra cash that is not related to your salary — into your retirement account. Examples of this “found money” include a tax refund, money from your wedding or money you may earn from a side gig (more on that later). In addition, if you get a bonus on your job, put that extra cash to your retirement account.
Also read: Are You Saving Enough for Retirement? Go Through This List to Find Out
2. Open an IRA
This is a good strategy whether you have a 401K account or not. Used alongside a company plan, the Individual Retirement Account (IRA) can mean more income in retirement. With both accounts, you can contribute up to $5,500 annually, and an extra $1,000 for those over 50.
On the other hand, if your employer doesn’t offer a 401K, you’ll need want to open an IRA account anyway.
When you save for retirement with a 401K or IRA, the IRS treats your income as smaller than it actually was, and as a result — you pay a lower tax.
4. Work longer
While many folks dream of retiring in their 60s, the truth is that we are working for more years than ever before. And there’s nothing wrong with that, especially if you enjoy your work — when it doesn’t really feel like work.
Delaying your retirement will give you more time to build up your retirement funds, along with a shorter retirement for which to save. Moreover, it can also mean delaying Social Security and receiving a bigger monthly check in the future.
Nothing is black and white, and you may decide to continue working but with fewer hours. One thing you’ll want to check though is whether there is a minimum retirement distribution, which may require you to withdraw money at a certain age.
5. Get a side job
If you can’t put more money into your retirement fund, perhaps you need another job. Internet has brought along a number of different opportunities for just about anyone. There are many side gigs you can try to earn extra cash every month. And some of those gigs could be turned into full blown careers. That could take some time but at the end — it’s worth the effort.
We have a separate article listing a number of different job opportunities — you can see it here. You’ll want to bookmark that page to check all (or most) of them and find those that work for you. In most cases, you don’t need any special skills or knowledge — of if those are required they will come provided with the service. Check it out.