Behind on Retirement Savings? 3 Strategies for 2022

You’ll often hear that Social Security won’t pay you enough money to live comfortably in retirement. And there’s a lot of truth to that.

If you’re an average earner, you can expect your monthly benefits to replace about 40% of your paycheck. But chances are, you’ll want or need more income than that to maintain a decent standard of living, and that’s where personal savings come in. If you’re behind in that area, here are a few strategies to employ in the new year.

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1. Snag your full 401(k) match

A great way to catch up on retirement savings is to score free money in your 401(k) plan. And if your employer offers a match, there’s your opportunity.

Many companies that sponsor 401(k)s also match worker contributions to varying degrees. If you put enough money into your 401(k) from your own paychecks, you might snag a generous boost to your nest egg.

2. Make sure you invest aggressively

You’ll need decent growth in your retirement plan to accumulate a lot of money in time for your senior years. And if you’ve lagged on contributions to that plan in the past, you’ll especially need solid growth to make up for it.

Whether you have your money in an IRA or 401(k), take a look at where your retirement plan is invested. If you’re many years away from retirement, you’ll want to load up on stocks for maximum growth.

Keep in mind that only IRAs let you buy individual stocks for retirement. With a 401(k), keep an eye out for low-cost index funds that track a stock market index, like the S&P 500.

3. Contribute to a health savings account if you’re eligible

Even if you’re saving for retirement in an IRA or 401(k), you may have the option to contribute to another plan that can serve as a retirement account of sorts — a health savings account (HSA). Like IRAs and 401(k)s, HSAs offer tax benefits on contributions, and while their purpose is to help people set money aside for healthcare, they’re also very flexible.

HSA funds never expire, so if you contribute to one of these accounts in the new year, you can use your money in 2022 to cover near-term medical bills or reserve that money for your senior years. Any HSA funds you don’t use immediately can be invested for added growth, and withdrawals are tax-free, as long as that money is used for healthcare expenses.

Furthermore, once you turn 65, you can take HSA withdrawals for any purpose and avoid penalties. So your HSA could serve as your backup retirement-savings plan.

The only catch is that to participate in an HSA, you must be enrolled in a high-deductible health insurance plan. In 2022, that means having an annual out-of-pocket deductible of $1,400 or more for self-only coverage and $2,800 or more for family level coverage.

Maybe you haven’t set as much money aside for retirement as you would’ve liked by now. But a new year means a whole new opportunity to better your long-term financial outlook. And if you make these moves, you can get yourself back on track in no time.

The $16,728 Social Security bonus most retirees completely overlook
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