One day it hits you: you’re behind on saving for retirement. Way behind. Maybe you just had an eye-opening meeting with a financial adviser, and worry that you don’t have enough money to retire comfortably.
Maybe you received a yearly statement for your 401(k). However you came to the realization, you know it’s time to act.
Catching up is easier said than done, and those of us approaching retirement age may feel like we’re doomed to lackluster golden years.
Thankfully, there are long- and short-term options to boost retirement funds and cut expenses. If you’re worried about retirement, here are four ways to add to your nest egg:
1. Ease Retirement Worries with Catch-Up Contributions
Retirement accounts like IRAs have catch-up provisions for people 50 and older.
If you have a 401(k), 403(b), SARSEP or governmental 457(b), you can put an extra $6,000 USD a year into your account. That’s not including the $18,000 you’re already able to contribute.
If your employer has a matching program, they’re allowed to put in $53,000 (or $59,000 including catch-up deposits) or 100% of the employee’s compensation, whichever is smaller.
You’re also allowed to contribute an extra $1,000/year to your IRA, bumping up the total to $6,500.
2. Delay Social Security
Instead of taking Social Security benefits as soon as you’re eligible (age 62), wait until you’re 70. People who take their benefits before 65 permanently decrease their stipend by 25%.
However, if you wait until you’re 70, you can increase how much you’ll receive by 8% a year. If you need Social Security in retirement, keep working until you hit 70. A part-time job could provide enough money to last until you hit that magic age.
3. Cut Your Expenses
If you’ve done all the above and are still struggling, it’s time to cut expenses. This might be difficult if you’ve become accustomed to a certain standard of living, but retiring comfortably is often about downsizing. If you’re willing to sacrifice in the short term, you’ll be better off heading into retirement.
Ask yourself: Can you sell your house and lower your living expenses? Do you really need two cars? Can you put off this year’s vacation?
4. Make More Money
Whether it’s finding a part-time job, driving for Uber or negotiating a higher salary, making more money is an effective way to add to your nest egg. Many people have hobbies or talents they’ve never thought to monetize.
