3 WAYS TO OPTIMIZE YOUR RETIREMENT SAVINGS
There’s a reality that human beings experience from birth, and that is—we’re getting older every day.
Most adults have to work to earn an income, and unfortunately for some people, as they near retirement age, they’re not in a position to stop working. For others, though they retire, they do not have enough funds to feel at ease during their golden years, and supplement their income with part-time work.
These two scenarios are the experiences of many people who didn’t think of how to best grow their income and then protect their money while they still had the energy to work at an optimal level.
Even as a retiree, you will have expenses to pay, from housing and healthcare costs to groceries and other financial obligations. In addition, government programs may change and there may be economic shifts such as inflation, which can affect the value of your dollar.
Protecting your coin boils down to keeping more money in your pocket.
By making choices that’ll allow you to increase your retirement savings, you can retire having a sense of independence. Moreover, if you have children, you wouldn’t have to ask them for money, many of whom are facing their own expenses such as student loan payments.
One of our most popular podcast episodes was the finale of season II, Protecting Your Coin. In this episode, we shared with you why it was important to save and invest your coins.
We all face certain challenges, whether it’s paying back student loans, helping family members, or not earning your desired salary. However, despite the challenges, it remains important that you take a long-term view of your finances while you have the health, capability, and time to work. In other words, put something aside for the future.
This starts with looking at your wants versus your needs.
Be mindful of which category your purchases will fall into as you don’t want to make large purchases, such as buying a car, that have monthly payments attached to them based on your ego or getting validation from others. Remember, regardless of appearances, it is your time that is really being exchanged for the money gained.
Next, decide on what kind of lifestyle you want to live now and, in the future, and base your financial planning around this. Here is where your priorities will matter.
We all know someone who’s driven an expensive car that they’d park in front of an apartment parking lot. Here’s where your mindset also matters. When you make financial choices where you aren’t getting what you want now, do you view it as depriving yourself?
Deprivation is rooted in the viewpoint that you are restricting yourself. This person’s focus would be on what they are unable to do, such as going out to eat several times a week. On the other hand, the person who is willing to make disciplined financial decisions knows that it comes down to choices. He or she knows that deciding to cook more meals at home instead of ordering food from UberEATS, and abstaining from other splurges, allows them to prioritize their finances now so that they can do more with their money later on.
Having a plan for your money means that you do not have to settle for deprivation.
It also means that you are saving an emergency cushion. With an emergency cushion in place, when health issues and other unexpected financial situations pop up, you won’t be left scrambling to pay off these unexpected bills.
Think about the pinch you might have felt when an unexpected situation popped up that you had to take care of, while having the benefit of being able to work and pay off the expense. Now picture the same scenario are a retiree.
Think about the future and commit to financial planning that will have a positive impact on it. We’re sharing three strategies that’ll help you in optimizing your retirement savings.
Set a budget
In many ways, here lies the foundation for what happens with you and your money. It’s important that you set a budget with your money and stick to it. Do not live above your means.
You can also use any raises that you receive to pay off debt or even make personal investments, whether it be in stock or property. This will enable your money to grow, rather than if you’d used the raise to expand your lifestyle. Another benefit of setting a budget as part of your financial planning and making choices such as investing is that it will create a compound effect with your money.
In addition to this, monitor your accounts to ensure that you adhere to your financial goals. Budgeting will not only help you grow a retirement account, but it’ll also allow you to clearly see where you can be financial flexible in your life.
Negotiate for maximum compensation
Always negotiate for a higher compensation with any new job, as this positions you for better long-term benefits. Every dollar that you can earn matters, whether its base salary or equity, as it compounds.
Earning more money also equates to your ability to pay off your student loans faster, have coverage for childcare costs, and the capability to pay for routine services, such as car maintenance, with greater ease.
Max out your 401(k)
A 401(k) plan is an automatic way for you to save for retirement as it’s part of companies onboarding process.
One great thing about a 401(k) plan is that an employee’s contribution is made of pretax dollars. Contribute to your 401(k) to get your full employer match. Your employer is essentially providing a boost to your retirement savings.
By making smart money decisions and working to protect your coin now, you can avoid the pitfalls of economic desperation later on. In addition, by setting a budget, negotiating for maximum compensation, and maxing out your 401 (k), you have decided to empower yourself for the long-term.