Last Updated on Apr 1, 2020 by James W
As usual, Oscar Wilde hit the nail on its eccentric head, saying: “I never put off till tomorrow what I can possibly do – the day after.??? The trouble is, of course, that the day after (like tomorrow) has a habit of arriving. Retirement always seems such a long way off, until it isn’t. But whether retirement is in the distant future or just around the corner, you can be taking steps now to increase your income later.
Make Saving a Priority
As long as saving is what you do with the money that is left over, you will never do it. Your first step is to make a decision that you are going to save; the second is to find out what you need to save in order to have the lifestyle you want in retirement; the third is to budget your income and expenses to get as close as possible to that target. Then fix the amount so that it comes out of your income before you can spend anything else.
Look Beyond Retirement
Retirement is not the last stage in your life’s journey. Unpalatable as it may be, you need to factor in the possibility that you might need care, and how to protect your family from the financial shock of your death. If you live in California, for instance, it is never too soon to get the advice of this burial services planning company in Los Angeles.
Retirement Finance Schemes
If you have a traditional 401(k) retirement plan, make sure that you are getting the greatest value from it. Find out how much you need put into it in order to get the maximum contribution from your employer, and aim for at least that amount.
Otherwise, open an Individual Retirement Account (IRA). There are two types: a Traditional IRA normally has tax-free contributions and you pay tax on the withdrawals, while a Roth IRA works the other way around. There are various limitations and you should take advice on which would be best for you.
If you have left things a bit late you can make higher contributions to both 401(k) schemes and IRAs after the age of 50.
Invest the Little Extras
When you have new sources of income—salary increase, inheritance, bonus—aim to put at least half of it into your retirement savings. It’s too easy to fritter it away and have nothing to show for it later.
Put It Off Until Tomorrow
Not the planning, the retirement! The later you can wait before drawing your retirement savings, the more you are going to get each month. You can defer drawing your Social Security until you are 70, which will pay you 30% more per year than if you claim it at 66.
There are plenty of things you can do to increase your retirement income, but none of them happen by themselves and none of them come without some cost now. As always the first step is often the hardest, and once you have made up your mind to act, the rest will follow.
Kevin Patel works as a personal finance consultant and answers a lot of retirement concerns and queries from people in his day-to-day work. He doesn’t mind sharing his advice and writes articles about retirement topics for an online audience.