Rising living costs and increased job losses have made it more difficult than ever for individuals to start, add to or maintain decent retirement funds. Over time, this will result in them not being able to afford to live once they’ve stopped working. Below are a few ways in which you can get that retirement nest egg to start growing without it having a major effect on your current living standards.
Use Tax Refunds Wisely
Several individuals use tax refund money to purchase luxury items that they would otherwise not be able to afford. Instead of doing this, consider investing 50% of it before doing anything else. Large amounts of money are great to receive each year, but they can be made even more enjoyable when at least a portion is left to accumulate interest.
For example, if you’re fortunate enough to earn $100,000 a year and you receive a $2,000 refund, investing just half of it would be the equivalent of increasing your existing 401(k) contributions by a full 1%.
Don’t Squander those Raises
Raises are generally seen as rewards for remaining loyal to your employer and proving your value as an employee. While it is tempting to increase your standard of living whenever you receive a raise, this won’t be too beneficial to you when the time comes to stop working.
Instead of spending the full amount of the raises you receive, consider saving 50% of it instead. For instance, if your raise amounts to an extra $50 per week, save $25 of it and use the rest. Saving this amount will enable you to still enjoy the fruits of your labor, but you’ll also be securing your retirement at the same time.
In most cases, the easiest way to save 50% of your raises will be to direct them to your 401(k) account because this will redirect the money automatically.
Consider Investing the Earnings from a Side Job
These days, thousands of Americans are working side jobs, either out of sheer necessity to make ends meet or to give their retirement funds a much-needed boost. Many of them have even been fortunate enough turn hobbies into paying gigs as well. If this is the case for you, why not consider using this to your advantage and save half of the earnings into a high-yield savings or retirement account?
While not everyone working second (or even third) jobs will be able to afford to save the earnings from these endeavors because of having to simply make ends meet, keep in mind that if you are able to save these funds, it will give your retirement nest egg a valuable boost.
Your main goal should be to save as much money as realistically possible without having to do without the essentials, and the advice above will go a long way in helping you to boost your retirement fund. Saving half of any extra funds you receive will still allow you to enjoy some of the extra cash – but you’ll also enjoy peace of mind in knowing that you’re securing your financial future at the same time.Continue reading
Regardless of whether you’re building an emergency fund, paying for your child’s college tuition or trying to save for that much needed vacation trip, putting funds into dedicated accounts can be quite challenging at times. Many individuals have stated that they simply cannot seem to save enough money, no matter how hard they try. However, the tips below could help you to double the amount of money you’re currently saving.
Give up One Luxury Item or Service
These days, most individuals have at least a few luxury items or services that they think they cannot do without such as a daily coffee or a meal out with the family each week. Although there is absolutely nothing wrong with the occasional treat, it’s crucial to keep in mind that even the smallest amounts of money that are spent in this way will add up over time.
For instance, a $40 fast food meal once a week will add up to around $160 per month, or a whopping $1,920 over the course of a year. Putting an amount of money like this into an emergency savings account or an IRA will yield extremely positive results over time. It’s not necessary to give up all of life’s little extras – after all, what would life be without the occasional treat? However, sacrificing one thing can make the world of difference to your finances.
Take Advantage of your Company’s 401(k) Benefit
If you’re fortunate enough to work for a company that offers a 401(k) benefit and you don’t take advantage of it, you will be missing out on a tremendous amount of money over time.
Your employer will usually provide you with a matching contribution up to a predetermined amount, so you should ideally be contributing the same amount from each of your paychecks. This is by far the easiest way to double the amount of funds that you’re currently saving and another benefit to this form of saving is that these funds are deducted from your earnings before taxes – saving you even more over the long term.
Don’t Put All your Eggs in One Basket
Although there’s nothing wrong with being more on the conservative side when investing your hard earned cash, you should ensure that your funds are invested in a number of different ways – diversification is essential if you’d like to see your investments grow as much as possible.
When diversification is approached correctly with a knowledgeable financial advisor, it provides your funds with the opportunity to double, triple or even quadruple over time. A good combination of funds can include your 401(k), a regular IRA and the purchase of shares in companies that are performing well – potential returns on a portfolio like this are virtually limitless.
Over time, you may also want to think about investing in property to further diversify your portfolio.
The right time to take a look at your savings and investment portfolio is right now. If you’re unsure of how to get started with making the right investment choices, contact our team for assistance today.Continue reading
COVID-19 has not only affected the way in which millions of individuals live and work each day; economists have noted that it could have disastrous effects on retirement savings as well – with some even being wiped out completely. Below are a few ways in which the current pandemic could have a negative effect on your retirement funding and plans.
Retirement Savings worth Trillions of Dollars could Vanish
During 2008, the Russell 3000 index that reflects the performance of the whole US stock market lost almost 40% in value. This resulted in the value of several US retirement accounts such as 401(k)s and numerous private retirement accounts falling by approximately 25% – effectively erasing as much as $2 trillion in retirement savings.
So far in 2020, the Russell 3000 Index fell by 25%, and this has decimated as much as $3.8 trillion in retirement savings funds and accounts.
Some Employers may Cut matching Contributions for 401(k) Accounts
More than 10 million employees have filed claims for unemployment benefits in the past few weeks, and those that have been laid off are also no longer able to contribute to their 401(k) plans.
Virtually all employers that provide 401(k) plans for employees offer to match contributions up to predetermined amounts, and these matches usually average up to 5% of an employee’s earnings. However, as the economy takes a nosedive, several employers are cutting costs wherever possible – with these matching contributions often being the first in line to be reduced or even eliminated.
Employees may have to Dip into Retirement Accounts
When financial emergencies arise – such as having income eliminated during the current pandemic – several individuals have no other option but to dip into their retirement accounts just to put food on the table or avoid being evicted from their homes.
If the funds withdrawn from these retirement accounts are not repaid, this will result in many employees not having sufficient capital to see them through retirement.
Some Employees may have to Retire Earlier than Planned
Many older employees who have been laid off as a result of the pandemic may be forced to take early retirement if their places of work don’t reopen or staff numbers are reduced upon opening. In many cases, older employees are among the first to be laid off when companies have to cut expenses.
Although Social Security provides a financial lifeline to unemployed individuals who are over the age of 62, beneficiaries who start collecting as soon as they reach 62 will receive up to 30% less funding than if they had been able to hold out until reaching age 66 and 8 months.
It’s clear that the pandemic will have a negative effect on the value of retirement accounts for the foreseeable future. However, this doesn’t mean that all is lost where your savings are concerned. If you would like to find out how you can get your retirement savings back on track or you’d like to start planning safor this time of your life, contact our advisers today.Continue reading
Coronavirus has significantly impacted the daily lives of millions of individuals all over the world, with several countries implementing stringent lockdown procedures to curb the spread. Not only has this affected the way people live in general; many businesses have had to close as well, leaving scores of individuals with any way to earn an income. If you’re currently struggling with financial uncertainty, the tips below can help you through this challenging time.
Put Large Purchases on Hold
The last thing you want to do when your finances are severely limited or worse, non-existent is commit to making any large purchases – especially if they will require monthly repayment. For instance, you may have been planning on replacing your vehicle or doing home upgrades while your finances were more stable, but now is certainly not the time to spend any money unnecessarily. Hold off until such time as your income is more stable.
Cut General Expenses wherever Possible
At a time when your next paycheck is not a certainty, you’ll also want to keep your general spending to an absolute minimum. This is the ideal time to go through each line item in your budget and determine whether it’s a genuine necessity or not. Items such as Netflix or other monthly subscription services may be nice to have but should be eliminated until such time as you’re more financially stable.
When planning your grocery list, snack items may sometimes need to be reduced or even eliminated to cut costs. Sugary cereals can be replaced with oatmeal for example, which will provide far more value for money over time. Although it may initially be difficult to eliminate fancier foods, it’s important to remember that maintaining financial stability is far more important over time than a bag of crisps.
Don’t be too Proud to Apply for Assistance
Although many individuals think that applying for and obtaining government assistance is only for ‘poor folk.’ However, various stimulus packages and other forms of financial assistance have been made available in each state to specifically address shortfalls that members of the public are experiencing as a result of not being able to work at the moment.
While it may seem like there’s a tedious amount of paperwork to fill in when applying for this assistance, it will certainly go a long way in helping you to put food on the table or even pay your rent while you aren’t able to earn an income as usual. Most recipients who have applied for assistance have received direct deposits into their bank accounts within a few days at the most.
The most important aspect to remember when dealing with any form of financial uncertainty is to limit spending wherever possible – and until such time as you’re able to work again. If you’re unsure of how to compile a realistic budget or you need assistance with regards to seeing where some of your expenses can be trimmed or even eliminated, get in touch with our financial team today. We will be more than willing to assist you.Continue reading