By Chris Risenmay, CFP®
If you’re like many pre-retirees, you’ve probably wondered, “Have I saved enough money to retire?” But as you draw nearer to retirement, you might also be wondering if it’s too late to give your retirement savings a boost. Thankfully, regardless of how much you have built up in your nest egg, there are some tried-and-true strategies that can help you maximize your retirement savings in your last few working years.
1. Save More
The most obvious thing you can do is save more. Cut back on expenses, channel a healthy percentage of any raises and bonuses directly to savings, and automate savings increases of 1% of your paycheck every few months. It may not seem like you are making much of an impact, but every dollar helps.
Your increased savings can be invested into your company 401(k) or 403(b) plan or your personal IRA. For 2017, you can contribute as much as $18,000 to a 401(k) plan and $5,500 to an IRA. If you are over 50, you (and your spouse, even if only you work) can invest an extra $1,000 per year into an IRA for a total of $6,500 for 2017. The catch-up contribution for those over 50 is even greater for 401(k) and 403(b) plans at $6,000, for a total contribution limit of $24,000.
2. Take Advantage of Your Employer Match
If you aren’t able to contribute the full allowable amount to your employer-sponsored account, save enough to max out your employer’s 401(k) match. One in four Americans leaves money on the table by not maxing out their employer’s 401(k) match.
Here’s an example of how this strategy can boost your retirement savings: If your employer offers $0.50 per $1 up to 6% of pay and your annual salary is $100,000, that’s $3,000 in free money for a total of $9,000 saved for the year. That amount adds up over time and can help you maximize your savings in a big way.
3. Make Catch-Up Contributions
If you are age 50 or older, you can contribute an additional $1,000 to your IRA accounts for a total of $6,500 and $6,000 to your 401(k) to add up to $24,000. The catch-up contribution is designed to help those closer to retirement age maximize their savings for retirement.
4. Watch Out For Fees
Along with upping your contributions to your retirement accounts, try to avoid high-cost funds, which can eat away at your savings. The higher the fees you pay, the longer it will take for your investments to grow. Many people don’t realize how much they’re paying in fees (or assume they aren’t paying any), but retirement account expense deductions average 1.5% per year.
5. Invest For Growth
Your goal retirement date doesn’t have to dictate your investments’ time horizon. You may be retiring in 10 years, but you don’t need to set a 10-year horizon for your investments because you’ll only need a small portion of your nest egg in the early years. The rest of your money may stay invested for another 20 to 40 years. Invest with an appropriate perspective so you don’t end up cheating yourself out of years (or even decades) of growth.
On the other hand, don’t chase unrealistic returns in the hopes of cashing in big rewards. You still need to maintain a proper asset allocation so your portfolio can grow healthily without too much risk.
6. Work With An Advisor
There are a number of options for boosting your retirement savings, but an experienced financial professional can help you make the most of your money. At Cypress Wealth Services, we partner with you in the “second growth” stage of your life as you work to protect and grow your wealth. We work with you to create your “Second Growth Blueprint,” a customized, detailed plan of what you need to do in order to meet your goals.
If you are want to maximize your retirement savings, we would love to sit down with you and make sure that your finances are working for you. To schedule a complimentary financial consultation, or to get a second opinion on your current portfolio, contact us today.
About Cypress Wealth Services
Cypress Wealth Services, an independent RIA firm providing financial planning and investment management to high net worth individuals, families, business owners, and institutions. CWS is comprised of professionals with diverse backgrounds and extensive experience and qualifications. CWS is uniquely qualified to serve a broad range of client needs. Their experience and expertise act as a foundation for their client service process, The Second Growth, which focuses on efficiently protecting, growing, and transferring to their loved ones the wealth and legacy a person has already built. With offices in Palm Desert and Anchorage, the firm serves clients across the country. Learn more by visiting www.CypressWS.com.