5 easy ways to save more for retirement in 2021

About 71% of Americans say their financial planning skills could be improved, according to a 2020 survey by Northwestern Mutual. Whether or not you’re setting New Year’s resolutions, the start of the year is a great time to set goals and get your finances back on track.

Saving for retirement is an essential goal, and whether you are nearing retirement age or have decades to spare, it’s important to save as much as possible. Here are some easy ways to boost your savings in 2021.

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1. Maximize your employer correspondence

If you’re lucky enough to have a 401 (k) that offers matching employer contributions, it’s wise to take full advantage. Matching contributions can potentially double your savings with virtually no effort on your part, and if you don’t save enough to earn the full sum, you’re running out of free money.

The average employer match is about 3.5% of a worker’s salary, according to data from the Bureau of Labor Statistics. If you earn, say, $ 50,000 per year, that equates to $ 1,750 per year in free money from your employer.

2. Take advantage of catch-up contributions

Whether you invest in a 401 (k) or an IRA, there are limits to how much you can save each year. In 2021, you can contribute up to $ 19,500 per year to your 401 (k) and $ 6,000 per year to your IRA.

However, if you are 50 or over, you are eligible to make catch-up contributions. Catch-up contributions save you more than the typical worker. Starting in 2021, people aged 50 and over can save an additional $ 6,500 per year in a 401 (k) and an additional $ 1,000 per year in an IRA. If you’re falling behind on your savings, these higher contribution limits can help get your finances back on track.

3. Automate your savings

It’s easy to put retirement savings on the back burner, only saving the money that’s left in your budget at the end of the month. But with this strategy, you run the risk of saving inconsistently or not saving as much as you should each month.

However, by automating your savings, you can save a fixed amount each month. Think of it like paying yourself first. When you set aside a certain amount in your budget specifically for retirement, it’s easier to keep your savings on track.

It is possible to automate your savings whether you have a 401 (k) or an IRA. With a 401 (k), you may be able to set up automatic transfers so that a portion of each paycheck goes straight to your retirement fund. With an IRA, you can set up transfers from your bank account to your retirement account on a schedule you choose.

4. make sure you invest aggressively enough

Most investors have their money spread over a variety of stocks and bonds. Stocks are more aggressive because they are riskier, but they also have higher average returns. Bonds are less risky, but they have lower rates of return on average.

When you have years, if not decades, to save, you should strive to invest more aggressively so that your savings grow as quickly as possible. Although stocks are inherently riskier than bonds, there is plenty of time for your money to recover if the market experiences a downturn.

A common rule of thumb to consider is the rule of 110, which states that when you subtract your age from 110, the result is the percentage of your portfolio that should be invested in stocks. So if you say, 35, you should aim to invest 75% of your portfolio in stocks and 25% in bonds.

5. Aim to save 1% more

You don’t have to make big changes in your life to save more. In fact, increasing your savings rate by just 1% can add up over time.

According to a study by Fidelity Investments, a 35-year-old earning a salary of $ 60,000 per year can save an additional $ 85,000 at retirement age simply by increasing their contribution rate by 1%. This comes down to just $ 12 more per week.

It’s never a bad time to save more for retirement. With these strategies in place, you can start the year off on the right foot and boost your savings.