Saving enough for retirement is a tough task at the best of times, and we're definitely not living through the best of times right now. Many people want to save a little more money each month, but finding the extra cash isn't always easy. If you're not sure how to get started, one of these tips might help.
1. Cut unnecessary expenses
Grab your bank and credit card statements from the past year or so and comb through them, looking for areas where you could cut back. If you notice any subscriptions you're no longer using, canceling them is an easy way to free up some extra cash.
It might also be helpful to break your monthly spending down into different categories so you can see where most of your money is going. You might be able to identify some opportunities to cut back, like carpooling with a neighbor or taking public transportation instead of spending so much on gas. Take the extra money you save each month and put it toward your retirement savings.
2. Claim your 401(k) match
Sometimes, getting more money for retirement is as simple as changing where you're keeping your savings. If you're eligible for a 401(k) match, you should definitely put your money here first every year, at least until you've claimed the full match. If you do so, your employer will also give you some money for retirement.
How much you get depends on your salary and your company's matching formula. Some companies do a dollar-for-dollar match up to a certain percentage of your income, while others do a $0.50-on-the-dollar match. Talk to your company's HR department if you're not sure how its matching system works.
You might also want to inquire about its vesting schedule if you're new to the company or you plan to leave the job soon. This determines how much of your employer-matched funds you get to keep when you leave. Whenever possible, try to stick it out until you're fully vested so you don't forfeit any of the 401(k) match you've earned.
3. Start a side hustle
Side hustles give you a lot of freedom to decide how much you want to work and what you want to do. It's even possible to turn some side hustles into a full-time job if you'd like. Think about your interests and talents and how you could monetize them to help those around you.
Normally, you'd owe taxes on your side hustle earnings, and you'd have to pay these quarterly to the IRS. But if you stash your money in a tax-deferred retirement account, it reduces your taxable income for the year. That means you won't have to worry about paying any taxes on your side hustle money until you withdraw it in retirement.
Another advantage of starting a side hustle is that it opens up new retirement account options for you. You can still save in a traditional or Roth IRA if you want, but you can also open a SEP IRA . This is specially designed for self-employed people and allows them to contribute significantly more than a typical IRA. However, you can't exceed more than 25% of your net self-employment income.
Whichever methods you use to boost your retirement savings, make sure you stay consistent with them. And keep an eye out for even more opportunities to grow your nest egg. It might not seem like a few extra dollars makes a lot of difference, but after it's been invested for a few decades, you'll definitely be glad you set aside that money.
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