Top Strategies to Boost Your Retirement Savings

Saving for retirement can be a daunting task, but with the right strategies, you can ensure a comfortable and financially secure future. At O1ne Mortgage, we understand the importance of financial planning and are here to help you with your mortgage needs. Call us at 213-732-3074 for expert advice and services.

1. Start Now

The sooner you start saving for retirement, the more time you have for compound interest to work its magic. Compound interest allows your savings to grow exponentially over time, as you earn interest on both your principal and the interest already earned. For example, if you start saving $250 a month at age 25, you could accumulate $464,286 by age 65 with a 6% annual interest rate. Starting early gives you a significant advantage in building your retirement fund.

2. Make a Plan

Having a clear retirement plan can make saving less overwhelming. Determine your ideal retirement age, the lifestyle you envision, and the income you’ll need to cover expenses. Use guidelines like the 70% rule, which suggests you’ll need at least 70% of your preretirement income, or the 4% rule, which recommends withdrawing 4% of your investments annually. Calculate your monthly savings goal and adjust as needed to stay on track.

3. Save 15% of Your Income

Experts often recommend saving 15% of your income for retirement. However, save as much as you can reasonably afford, even if it’s less than 15%. The key is to start saving regularly and increase your contributions whenever possible. Automate your savings by setting up direct deposits from your paycheck to your retirement account.

4. Increase Your Contribution Every Year

Small annual increases in your retirement contributions can make a big difference over time. For instance, increasing your contributions by just 1% each year can significantly boost your savings due to the power of compound interest. A 35-year-old earning $60,000 who increases their contributions by 1% annually could accumulate an extra $85,492 by age 67.

5. Take Advantage of Your Employer’s 401(k) Match Benefits

Maximize your employer’s 401(k) match benefits to boost your retirement savings. The average employer match is 4.5% of an employee’s pay. If you contribute 10% of your salary and your employer matches 4.5%, you’re effectively saving 14.5% of your salary. Always aim to get the full employer match, as it’s essentially free money that grows over time.

6. Save Money in an Individual Retirement Account (IRA)

If you don’t have access to a 401(k) or have maxed out your contributions, consider opening a traditional or Roth IRA. Traditional IRAs offer tax-deductible contributions and tax-free growth, while Roth IRAs provide tax-free growth and withdrawals. For 2023, the maximum annual contribution is $6,500, or $7,500 if you’re 50 or older. Diversifying your retirement savings with an IRA can provide additional financial security.

7. Make Catch-Up Contributions

If you’re 50 or older, take advantage of catch-up contributions to boost your retirement savings. The IRS allows additional contributions above the standard limit, with a 2023 annual contribution of $7,500 for an IRA and $30,000 for a 401(k). Maximizing these contributions can significantly enhance your retirement fund, especially with the benefits of compound interest.

The Bottom Line

Starting early and making regular contributions are key to building a robust retirement fund. Even if you’re behind on savings, creating a retirement plan and maximizing your contributions can improve your financial outlook. At O1ne Mortgage, we are committed to helping you achieve your financial goals. For any mortgage service needs, call us at 213-732-3074. Let us assist you in securing a comfortable and financially stable future.