The best times to up your retirement contributions
Although it’s true there’s really no bad time to start investing, it can be tricky to figure out how to siphon off funds from other areas of your budget and redirect them to your future needs. When it comes to retirement, though, 59 percent of Americans surveyed in an AIG study said that they feared running out of money more than they feared death. In an effort to curb whatever fears you might have about your own financial future, now is a perfect time to earmark the following life events as ideal opportunities to increase your retirement contributions in a more seamless way.
The opportunity: You just got a raise.
Why it’s a great chance to save more: While it’s tempting to use a raise to heighten your lifestyle (after all, you deserve it!), making more money also provides you with a great opportunity to siphon off at least a percentage of your raise to put it directly into your retirement account from each paycheck. This way you’ll never even technically miss it, since you were never used to having it in the first place. While you’re busy increasing your savings for the future, a raise is also a great opportunity to make sure that you are meeting any 401(k) match your employer offers, as well as a great time to increase contributions to other financial goals, like paying down student loans or credit card debt.
The opportunity: Your kids just went to college.
Why it’s a great chance to save more: Instead of focusing on your empty nest, redirect those feelings into something more productive by taking some time to focus on your retirement. Now that your kids are out of the house, there’s a high likelihood you’ll be saving on monthly bills like food, electricity, water and gas, among other things. Rather than funneling that savings into something frivolous, channel it right into your retirement account to help pad and protect your future.
The opportunity: Your kids just graduated from college.
Why it’s a great chance to save more: If you’ve been paying for your child’s college education, nothing says freedom quite like graduation day. Take the paychecks you’ve been sending to your kid’s school and reroute them to your retirement account for a nice little bump.
The opportunity: You just downsized your home.
Why it’s a great chance to save more: Whether your kids have moved out, you moved for work or you just realized you don’t need as much house as you currently have, if you’ve downsized your home for whatever reason, you’re probably saving on homeowner’s insurance and other bills, as well. Using that extra cash to pad your retirement savings is a smart move.
The opportunity: You just turned 50.
Why it’s a great chance to save more: Experts say the earlier you can save for retirement the better, and while that’s certainly true, there are some advantages to being a middle-aged saver, as well. To start, the older you are, the more likely you are to have a reliable income, plus anyone 50 or older is eligible to put away an additional $1,000 as catch-up contributions into their IRAs. This is a great way to make up for lost time if you haven’t been able to save as much as you would have liked in previous years.
If you think it may be time to increase your retirement plan contributions, let’s get started.
It can be easy to say that there’s never a good time to put more money into retirement — there’s likely always something that might get in the way. At the end of the day, though, saving as much as possible in a retirement account is one way that you may have enough money to live the life you want to when retirement comes. It’s a good idea to check your portfolio at least once a year, and to increase contributions up to the IRS annual limits periodically. Luckily, those particular life events listed above can help provide a little extra cushion when doing so.
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