Saving for retirement is a very important part of financial planning. Having a goal for your retirement savings can keep you on the right track, but meeting those goals can be difficult. A recent survey conducted by Capital One Bank found that only a third of respondents accomplished their financial goals last year. This year, you can improve your performance by following these simple retirement savings tips that boost your retirement account balances.
Automate Your Retirement Account Deposits
One of the best ways to boost your retirement savings is to automate your deposits into you retirement accounts. This allows you to save continuously without exerting any effort, making it more likely that you will reach your savings goals. Your employer does this for you with 401k accounts and other workplace based retirement plans by taking the deposits directly out of your paycheck. With IRAs and other retirement accounts, you can set up a direct transfer from your bank account through your bank’s online features.
Take Advantage Of Free Money
If your employer offers matching contributions for a 401k account or other workplace-based retirement plan, take advantage of the free money to boost your retirement savings. The matching funds are desposited directly into your retirement account where it can grow until it is needed. Many employers offer a percentage of wages as matching funds, so be sure to contribute enough to get the entire match amount.
Aim For The Maximum Contribution
The IRS has instituted maximum contribution amounts for retirement accounts to prevent abuse of the system. The maximum contribution amounts for 2016 are $18,000 for 401(k), 403(b), and most 457 plans for account holders age 49 and under. Those age 50 and over can contribute an additional $6,000 for the calendar year. For traditional and ROTH IRAs, the contribution limit for 2016 is $5,500. Those age 50 and older can contribute an additional $1,000.
Don’t Tap Your Retirement Savings
If you want your retirement account balances to grow into the amount you need for a secure retirement, you must refrain from tapping into the funds. Some people treat their retirement accounts like emergency accounts and withdraw money when they have a big unfunded expense. Taking out the money prevents you from taking advantage of the compound interest vital to growing a retirement account balance quickly. Set up a separate emergency account with at least $3,000 to use in the event of an unexpected expense.