BECU Investment Services
Saving money is hard enough by itself, but saving for retirement is a separate challenge. Fortunately, with a little planning and wisdom, your retirement goals can be within reach.
Whether you're just starting on saving for retirement or getting closer to your last day on the job, you can always take steps to give your savings a boost. While it might be true that you'll be better off the earlier you start, it's never truly too early or too late to begin.
Here are six tips to boost your retirement savings. If you're just getting started, think of these as a chronological timeline to follow as you begin. If you've already started, great! Read on to see if your approach is on track.
1. Contribute to your workplace savings plan
There are several advantages to a workplace savings plan (such as a 401(k) or VIP) offered by employers, including:
- Allows you to contribute pre-tax money
- Employer can offer a “match” program for employee contributions
- Employee can keep the account even after leaving the company
- Contributions are tax-deferred until you start taking distributions
For these reasons, it makes sense for you to consider contributing the maximum amount you can afford. The current annual contribution limit is $18,000, plus an optional $6,000 catch-up addition for anyone 50 and older. But even if you can't max out your contributions, the most important thing you can do is start.
2. Sign up for your employer's match program
Many employers offer a 401(k) matching program for employees trying to save for retirement. Depending on policy terms, your contributions to your 401(k) plan could be matched by your employer in a variety of ways; the most common of these is matching a percentage of employee contributions. If your employer offers such a program, be sure to opt in. This is basically free money! It goes without saying that this could be a great boost to your savings goals.
3. Open an Individual Retirement Account (IRA)
If you're contributing the maximum amount to a 401(k) and benefitting from your employer's match program, you can take it a step further. (This is especially useful for those looking to catch up on retirement savings.) By opening a Roth or Traditional IRA, you can supplement some of your retirement income. Traditional IRA contributions can grow tax-deferred, and may be tax deductible if your income limit allows. With a Roth IRA, contributions are always made with after-tax dollars, so they're not tax deductible. But the true advantage to a Roth IRA is that your investments grow tax-free, so you'll owe zero federal income tax on earnings once you start taking distributions. (Note: this assumes you're older than 59-and-a-half, and hold your contributions for a minimum of five years.)
For more about IRAs and which might be right for you, click here.
4. Set up an auto-investment plan
Chances are you've probably already got direct deposit set up with your paychecks. Automatic investing works the same way, except you're just contributing a set dollar amount from your primary checking, savings, or money market account directly into an IRA or investment account. This ensures you don't miss any contributions or stress about how much to set aside each month or quarter.
5. Delay Social Security payments
If you're getting close to retirement age, you can begin taking Social Security payments at age 62. However, for each year you defer payment, your monthly benefit will increase 8%**. You can delay receiving social security payments until age 70. Delaying social security even as little as one year can provide you with a nice boost to your retirement savings.
6. Set a goal and stick to it
Like any other savings goal, setting an amount for retirement is a process that takes effort and discipline. But, when you do it correctly, a comfortable retirement is a life step you can't put a price tag on. Set plenty of benchmarks along the way, and if something isn't working the way you thought it would, don't be afraid to re-evaluate your approach.
Financial advisors* with BECU Investment Services are here to help. Click here to set up a complimentary consultation or call 206-439-5720.
*Financial Advisors are registered with, and Securities and Advisory Services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC. Insurance Products offered through LPL Financial or its licensed affiliates. BECU and BECU Investment Services is not a registered broker/dealer and has a brokerage affiliate arrangement with LPL Financial. Investments are:
|Not NCUA/NCUSIF Insured||Not Credit Union Guaranteed||Not Obligation of BECU||May Lose Value|
BECU Investment Services Corporate Office located at BECU, 12770 Gateway Dr., Tukwila, WA 98168. BECU, BECU Investment Services and LPL Financial are separate entities.
**Annual delayed retirement credit percentage varies from 3% to 8%, depending on year of birth. 8% applies to persons born 1943 and later.