Some Important Tips on How to Retire with Just a Little Bit More in the Bank Account
Now more than ever, people across the country are struggling to add to and maintain their retirement accounts. With inflation and the cost of living on the rise, however, this could prove disastrous. Here are three vitally important tips you should know if you want to retire richer without feeling the pain in the meantime.
#1 – Use Raises Wisely
There’s nothing quite like getting a raise at work. It’s a reward for remaining loyal to your employer, proving your worth as a valuable employee, and getting the job done. Though it can be tempting to improve your means with each raise, this will serve you well now, but it will do very little for you once retirement comes along. Instead of spending, try saving half the amount of your raise with each paycheck. For example, if your raise will increase your biweekly paycheck by $100, save $50. Logically, you were making it before the raise, and you should continue to make it after. Saving half still gives you half to spend, but it also cushions your retirement rather nicely at the same time.
The easiest way to do this involves boosting your 401(k) contributions so the funds are pulled from your paychecks automatically. This way, you’ll never even miss it.
#2 – Use Your Tax Refund Wisely, Too
Many people use their tax refunds to make big purchases, facilitate repairs, or even buy luxuries they wouldn’t be able to really afford otherwise. Rather than spending your tax refund in this way, consider investing half of it. Big chunks of money every single year are nice, and they’re even nicer when they’re earning interest. If you make $100,000 a year and you get a $2000 tax refund, then saving half of that refund is the equivalent of increasing your 401(k) contributions by an entire percentage point.
If you want to invest your whole refund, go for it, but don’t feel compelled to do so. It’s nice to have an immediate reward for all your hard work. Invest half and use the other half as you see fit.
#3 – Grab a Side Job and Invest the Earnings
Last, but most certainly not least, in today’s day and age, there are plenty of Americans out there who work second jobs or “side jobs”. Some people don’t do this out of necessity; for many, they’ve managed to turn their hobbies and passions into a paying gig. If this is the case for you as it is for millions of Americans, you can use this to your advantage and invest half the income into a high-yield savings account.
Arguably, not everyone working a second job can afford to do this; some work extra to make ends meet. If this does not apply to you, remember that working a second job and saving diligently could result in a much earlier retirement date.
The goal, as always, is to save money without feeling the pinch. You have to be 100% committed to putting money away for your retirement years in order to make it happen. The three tips above will undoubtedly boost your savings, and the best part is that you will still get to enjoy your raises, your tax refunds, and your earnings from your second job or hobby at the same time.