You should be looking forward to retirement, not dreading the fact that you might not have enough money to support yourself.
Fortunately, there are a variety of ways you can supplement and grow your retirement fund, and you’ll be happy you took advantage of them. Being financially prepared can reduce your burden and provide peace of mind that you will be able to live comfortably in your Golden Years.
1. Start contributing to your 401(k) as soon as possible.
A 401(k) is an advantageous way to grow your retirement fund because it is contributed pre-tax. That means that your take-home income will not be reduced by the full amount you have put into your 401(k). The money invested in your 401(k) then has the opportunity to grow throughout your career. Typically, you will want to have a more aggressive investment portfolio toward the beginning of your career and taper it more conservatively in the later years to stabilize the funds you have saved.
2. Set additional money aside for your retirement consistently.
To establish the most significant retirement fund possible, you should regularly add to your retirement savings by putting away an additional portion of your current income or increasing your 401(k) contribution as your wages increase. Try to hold yourself to a yearly goal or use your age to create a savings plan. You can even automate your savings with apps or other services.
3. Invest in an IRA.
Since IRAs (individual retirement accounts) are tax-deferred, you will not have to pay income taxes or investment gains until you withdraw the money when you enter your retirement. This means that the full amount you contribute to your IRA will be able to grow faster than many other investment methods. Be sure to research what type of IRA is best suited for you.
4. Turn Your Home Equity into Income.
As a homeowner, you can apply for a Home Equity Conversion Mortgage (HECM), which is a special type of loan that uses your home as collateral. With a HECM, you can get an influx of cash to supplement your dwindling retirement fund. The money you receive can be used on any expenses you want, are tax-free, does not need to be repaid in monthly payments, and allows you to maintain ownership of your home.
5. Delay withdrawing your Social Security.
If you are financially able to postpone the use of your Social Security for a few years, or ideally until you reach 70, it will work to your advantage. This is a popular method for increasing retirement funds. When you wait to withdraw your Social Security, your benefits will increase by a higher rate. In the end, this means you will have more money to rely on.
6. Reevaluate your investments.
Investing is a smart way to grow and generate money. However, your portfolio should be diverse and tailored to your goals. To make the most of your investments, whether you plan to cash out on them in the near or distant future, it is often recommended that you seek the advice of a professional.
7. Downsize or rent your home or move to a more affordable area.
For better or worse, housing costs and property taxes continue to increase for many Americans. However, if you live in a metropolitan area or notoriously expensive state like California, you may consider looking for a smaller home or relocating to cut your housing expenses.
You might also consider renting out part of your home and allocating that income to your retirement fund. For many retirees, owning and maintaining a house is the bulk of their costs. Reducing this cost can help your retirement last longer.
8. Work part-time to make extra money.
Working a few hours a week can actually make a big difference, especially if you are making more than minimum wage. You can set aside these funds to save for something particular like for entertainment or travel. You would be surprised how quickly you can hit your goals by sacrificing a little free time.
If you have a niche skill that you developed over your career, you might be able to use it to bring in some extra income with little effort. Many seniors are finding consulting to be a profitable way to supplement their retirement income by doing something that comes naturally to them after years in their career from the comfort of their own home. Many sites make finding freelance opportunities easy.
Saving for and living off retirement can be difficult, especially with today’s growing cost of living compared to salaries. Whether you’re just starting to put money away or are already in your retirement, these tips can empower you to take advantage of your financial situation.