If you have no retirement savings yet, you’re not alone; it’s a dilemma faced by a quarter of Americans. Moreover, many of those who have savings don’t save enough.
Even worse is that the Social Security trust fund may become fully exhausted by 2034. That can lead to a benefit cut of over 20%.
That’s why it’s imperative to learn how to save for retirement now and without Social Security.
Don’t worry, though, as that’s what we’re here to discuss. Read on to discover our top tips on retirement planning and saving.
Table of Contents
Put More Money into 401(K) Contributions
The median 401(k) savings balance in 2020 was only $33,472. For workers aged 45 to 54, the mid-point was only $56,722. That goes up to $84,714 for those nearing retirement (ages 55 to 64), but it’s still undoubtedly lacking.
Since you don’t want to rely on Social Security income alone when you retire, it’s best to start a 401(k) plan ASAP. The earlier you do, the more money you can put into this tax-deferred savings account. The more money you have in it, the more sizeable its possible returns.
After all, a 401(k) plan grows much like a snowball, increasing with compound interest. So if you can, contribute up to $20,500 (the maximum amount) this 2022 to your 401(k). If you’re over 50, you can also add an extra $6,500 as your catch-up contribution.
Increase Your Income
One of the most straightforward ways to plan for retirement is to earn more while you still can. For example, you can ask for a raise if you’ve been with the same employer for several years now. That’s especially true if you’ve been doing an excellent job and your occupation is in high demand.
Suppose you can’t ask for a raise yet, such as if you’ve been only at work for a couple of years. In that case, you can put in more hours at work.
Even with only a few hours of overtime every week, the extra dollars you earn add up over the years. Moreover, you can use that to negotiate a raise once that becomes a viable option.
You can also get a side gig, which about a third of Americans have. You can then put the extra dollars you make into an emergency fund or a high-interest savings account.
Seek Professional Help with Financial Planning
Are you having difficulty deciding how much to save for retirement? Maybe you’re not sure whether to put more into savings or investments. Or perhaps you’re already eyeing real estate investments but not sure if they’re a good idea.
In that case, you might want to consider speaking with a licensed financial planner. They can advise you on retirement planning and even real estate investments. You can check out this page for more information on such services.
That’s How to Save for Retirement
And that’s how to save for retirement without relying on Social Security income. You’ve learned that you have a few options, including starting a 401(k) plan early and putting more money in it. It’s also wise to ask for a raise you believe you deserve, snag a few overtime hours, or pick up a side gig.
All that can help you build wealth as you transition to retirement.
Are you ready for more financial guides like this? Then please feel free to read more of our latest blog posts now!