Increase your savings
It can be difficult to know how much is enough when it comes to your retirement savings rate.
Many experts recommend a carryover rate of 15%.
This may come as a surprise to some workers, given that auto-enrollment rates can be as low as 3% or lesswhether those plans also have automatic annual increases, according to asset manager Vanguard.
Experts generally recommend contributing enough to at least get some matching from the employer, if one is available. Also remember that you will need to save even more if you are also investing on behalf of your spouse.
Increasing your retirement savings rollover rates, even a little when you receive raises or promotions, can have a big impact on your total over time, according to Greg McBride, chief financial analyst at Bankrate.
“The habit of increasing the amount you set aside can go a long way,” McBride said.
Invest in an IRA
One reason many workers don’t save more is that they don’t have access to a workplace retirement savings plan.
According to T. Rowe Price, only 64% of private sector workers have a defined contribution plan like a 401(k).
As long as you or your spouse have earned income, you can open an Individual Retirement Account yourself and save that way, McBride said.
For young workers, the ability to save in a Roth IRA with money they’ve already paid taxes on could earn them decades of tax-free compound growth, he said.
There are limits to the amount you can set aside each year through a 401(k) plan or IRA.
In 2022, workers can save up to $20,500 in their 401(k) plans. The limit for traditional and Roth IRAs is $6,000.
If you’re 50 or older, you can save even more with catch-up contributions – Additional $6,500 for 401(k) accounts and additional $1,000 for IRAs.
Consider working a little longer
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If you are approaching retirement age, another strategy to consider is to work longer.
Even a year or two of extra income can help bolster your financial security in retirement, McBride said.
The reason: you have more time to save and grow your assets and less time for your money to support you in retirement.
Wait to claim social security benefits
Working longer can also help delay your Social Security claim, which can significantly increase your potential monthly retirement benefit check.
Eligible workers can apply for the first time at age 62, but their benefits will be reduced for life.
While waiting for full retirement age — usually 66 or 67 — they will receive 100% of the benefits they have earned. And for every year they wait until age 70, their benefits increase even more.
The difference between an application at 62 and 70 can reach 77%.
“You basically get a permanent pay raise every year, you can delay taking Social Security from age 62 to age 70,” McBride said.