Building a retirement savings account is something every person must consider.
Sadly, many of us are guilty of spending our salary instead of saving it.
We should consider the fact that having an investment and retirement plans at an early age will help boost the compound interest your money can generate.
Here are 7 ways on how you can boost your retirement savings account.
7 Ways to Boost Your Retirement Savings Account
1. Contribute to Your 401(K) Plan and Boost Your Retirement Savings Account
There are two types of 401(k) plans: Traditional and Roth.
If your company offers the traditional 401(k) plan, then you’re at an advantage.
The traditional 401(k) plan allows you to contribute pre-tax money whereas the Roth 401(k) plan does not.
Let’s say you’re in the 15% tax bracket and you want to contribute $100 per pay period.
The traditional 401(k) plan allows the contributor to get around the tax system so they can receive and invest a larger part of their income.
2. Meet Your Employer’s Match for Your 401(K)
Many employers offer to match their employees’ 401(k) plan.
For example, the employer offers to match 50% of employee contributions that amount to 5% of their salary.
As an employee, you can earn more money for your retirement savings account if you meet the requirements of your employer’s match.
As such, if you earn $50,000 annually, you should deposit $2,500 into your retirement savings account so your employer would chip in an extra $1,250.
3. Set up an IRA
Similar to the 401(k) plan, the IRA is classified into two: traditional and Roth.
The contributions made to a traditional IRA account are tax-deductible but the investment earnings grow tax-deferred until you make your first withdrawal.
The contributions made to a Roth IRA account are taken after tax deductions.
Contrary to the traditional IRA, the earnings and qualified withdrawals are federal-tax-free and possibly even state-tax-free.
This is if the contributor is over the age of 59 ½ and has held the account for at least five years.
Set up an IRA account that suits you and while growing your retirement savings account.
4. Increase Your Contributions After a Certain Period
Let’s say things are going well for you and you recently got a 30% raise on your salary.
The first thing a person will probably do is treat themselves and their loved ones to a night out.
However, what do you do with the remaining money of your raise?
What will you do with the raise you get for the next months?
We suggest depositing a certain amount for your retirement savings account every time you come across extra cash.
So the next time you get a salary increase or added income opportunity, don’t blindly use it on unnecessary spending.
5. Set an Investment Goal
Whether you’re setting up an IRA account or a 401(k) plan, the key to successfully building your retirement savings account is commitment.
First, set a goal of how much you are willing to save for your investments
. Next, read up on the possible opportunities of how you can make your money grow through compound interests.
6. Delay Your Social Security
One of the techniques you can use to increase your retirement savings account during the latter part of your life is to delay the withdrawal of your Social Security payment.
The earliest age you can begin receiving Social Security payments is 62.
However, your monthly benefit increases for every year that you delay it.
Your benefit will continue to increase until the age of 70.
As such, retirees who’ll receive $18,000 per year at 62 can increase this to as much as $31,680.
7. Save up on Both Health and Wealth
This may sound cliché, but the most basic rule of building your retirement savings account is to take care of both your money and body.
Teenagers often waste their money and health away doing alcohol, cigarettes, and even drugs.
If you’re really committed to living an easy retirement then you should take care of yourself as early as possible.
Remember, it’s never too early or late to start investing.
Wondering how you can enjoy an early retirement? Watch this video by CBS News as Yahoo finance reporter Melody Hahm shares how to cut spending and build a retirement savings account:
Making your retirement savings account is easy once you have the right mindset.
Additionally, make sure to familiarize yourself with the best ways to make your money grow passively.
Incorporate these tips into your financial plan and start growing your retirement savings account today!
Did reading this article make you consider investing in your retirement savings account? Feel free to share your thoughts with us in the comments section below!
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