4 Ways to Help You Boost Your Retirement Savings

Boost Your Retirement Savings

Planning for retirement is something that anyone can do. Whether you’re a fresh graduate who just landed their first job or a long-time worker nearing retirement, you should boost your retirement savings. If your company offers a 401k, you’ll have accumulated a decent chunk of change over your career that you can cash out upon retirement. However, if you want to maintain your current lifestyle after retirement, you’re going to have to do a bit of planning. and self-moderated retirement investment while you’re still of working age.

Here are 4 ways to help you boost your retirement savings so you can retire in comfort.

1. Set a final goal and milestones along the way

It doesn’t matter what you’re working toward, you’ll get the best results if you know exactly what your goal is. Just saying you want to boost your retirement savings isn’t enough.

First, come up with a number that you think will allow you to live in comfort after retirement. It’s alright to use your current cost-of-living as a yardstick. You just add or reduce as you think is necessary for the quality of living you’re aiming for post-retirement.

The next step is to calculate how much money you need to put aside each month to reach that goal by the time you retire. If you’re planning on retiring early, you’ll have to put a lot more money into your savings every month. Experiment with the calculations until you find an amount that you can afford to save every month that won’t drastically negatively impact your quality of life today.

2. Start saving as early as possible

Due to the way compound interest works, it’s best to start saving as soon as possible. For example, a 25-year-old who puts in $50 a month will have roughly as much money saved up by retirement age as a person who puts away $100 a month in savings but started at 35 years old.

If you’re already putting some money away every month in a retirement account, stick with it! Consistency over time is key to achieving your retirement goals and boosting savings. And if you haven’t started saving, do it now! Every day you put off not opening a savings account will increase the money you have to invest each period in order to reach your retirement savings goal.

3. Save your extra funds

In life, there will be times when you’ll find yourself with some extra money. Whether you’ve received an inheritance or just got a raise, don’t forget to stash extra funds into your savings. It can be tempting to splurge that extra money on something fun and fancy. Try to put at least half of it away in your retirement savings. Treat yourself with something small and affordable. If you just got a raise, then go ahead and spend some of that extra money on something nice. Just remember to always work toward your retirement goal.

4. Delay your Social Security payment as long as possible

In America, you’re qualified to start receiving your Social Security retirement benefits from the age of 62. However, the longer you delay pulling from your Social Security savings, the more money you stand to earn.

For each year until the age of 70, your monthly benefit from Social Security will increase. If you’re able and willing to continue working past 62, every year you delay retirement will significantly affect your total benefits from Social Security. This also means greater survivor benefits for your spouse, which is another key factor to keep in mind when considering retirement.

Related Reading: How to deal with debt in retirement

Money Saving Tips that are Just Plain Weird

Being in debt, or permanently just skirting it, can be really stressful. It can feel like you’re trapped in a swamp – the more you struggle, the deeper in you feel. Of course, setting up a debt management plan is your first priority, as you’ll feel – and be – more in control.

Once you feel you’re headed in the right direction, you can take even more control – and maybe even bring a bit of fun (remember that?) back into your lives. Saving money can be a source of amusement and solidarity and can offer a sense of purpose – no matter how bonkers some of the ideas are. Here are four of the more out-there (but no less effective) ones.

Train your cat to use the toilet

As insane as this sounds, the cost of owning a cat can be more than £1,000 a year when you factor in food, vet bills, de-worming meds, toys and so on. You can’t nix the food and vet parts, but you can reduce or eliminate the cost of cat litter, which can total more than £100 per year. There are lots of toilet-training guides online, but if your moggy really doesn’t like it, then you’ll have to find another way of saving £2 each week. Like forgoing that fancy coffee.

Changing font before hitting “print”

Domestic printing is notoriously expensive – it can often be cheaper to just replace the printer and use its starter ink supply! Not using the printer at all would be the ideal answer, but it’s a necessary evil sometimes. Bring in some damage limitation by decreasing the size of the font and the font itself. Apparently, Century Gothic uses around a third less ink than the more commonly-chosen fonts. Using draft mode is also handy, but don’t go too far with this and with decreasing the font size – teachers don’t like using magnifying glasses to grade homework…

Make the world a cooler place

We all know how turning the thermostat down a degree can shave off 10% of your heating bills. That’s great, but how about having a chilly challenge? That’s right. No heating for one day a week, or for a few half-days a month. Our forebears managed it. Choose sunnier autumn and winter days and try to go as long as possible before sparking that boiler up. Even if you only manage a couple of hours, it’s something, and you can come up with some fun ways to stay warm, like hanging out in the kitchen and batch-cooking (which is another good money-saver; just not quite as bizarre…).

Wear too many clothes onto the plane

You’ve found some cheapo flights on a budget airline! Yay! But what’s this? Your luggage is a couple of kilos or centimetres over and you’re being charged £20? You can eliminate this risk, which is often a problem on return flights, by wearing some of your luggage – two jumpers, a skirt over trousers – you get the picture. You could also develop heat exhaustion, though, so do watch what you’re doing.

5 Steps You Can Take To Pay Off Your Debt

Whether you have some student loans, have been unfortunately living on your credit cards, or have just made a mistake or two along the way, you deserve a debt free life. You’re just going to have to work for it. That’s ok, though- work means goals and goals feel great to get to. You can get motivated by this process and actually use it to start taking real control over your financial life.

Every process begins with step one, and we will start there too. Take deep breaths and tell yourself you can do this, because you can! A few small changes will make way for bigger ones and you’ll start to see your debt number shrink.

Budget, Budget, Budget

You knew this was coming. You need to have a budget, you need to read it and you need to stick to it. If this feels painful, remind yourself that it feels worse to overspend and end up in a bad position. It also feels worse to have the uncertainty looming over you of not having any idea what is going on with your finances.

Figure out all of your expenses for the month (break them down weekly if that works best for you) and subtract that from the total amount of money you bring home every month. This clearly shows you your ‘wiggle room’ or ‘fun money’ but it also shows you the potential you have to put funds away. You don’t have to always spend it all.

Calculate your debt so you know what that figure looks like. Knowledge is power and the first key to your financial freedom.  How much of your ‘fun money’ can you spend to pay off your debt? Can you make other sacrifices in other areas of your budget to free up more funds? We will talk about tips for that a little later.

Conventional wisdom is to pay off the largest debt first so concentrate your money there as much as you can. How long will it take you to clear that debt? Now you have a goal and a date to motivate you. Once the first debt is done with, apply that money to the next largest debt and so on.

Cash Is King

It is often the best idea to make cash transactions when you are on a budget. There is nothing like a real time, physical representation of what you are spending to keep you focused on your goals. If you want, you can even use the envelope method of saving, where you set aside cash on a weekly basis in labeled envelopes to cover the cost of your bills and keep your spending money separately, also as cash.

Avoid the temptation to borrow from the envelopes, though! For some it is easier to open a separate checking account for only bill funds and transfer those monies on a weekly basis. You may not even want a debit card for that account. Understand your shortcomings and don’t berate yourself for them, just figure out a way to outsmart yourself for your financial protection.

Eliminate the Fluff

As you work your budget, you may find you’d rather spend an extra $20.00 a month on food than on streaming services for entertainment. You could get by with one instead of the three you have. Maybe you pay for lawn services even though you have a lawnmower. Why not get out and get some exercise and DIY to save some funds? The same goes for some luxuries like pedicures or some hair salon services. By doing these things yourself, you can build more room in your budget.

This is a good time to talk about coupons and discounts too. Talk to all of your service providers to be sure you have the best and most current deal they can offer. Be firm and ask for what you want. When it comes time for the grocery store, think about shopping at a discount or wholesale store and buying items you frequently use in bulk. Pick up the Sunday paper and plan your meals around what is on sale. You can save significantly by doing this.

Coupon are available for many goods and services on various online coupon websites. Frugaa.com is one of those sites and has grouped discounts and deals together to make finding them easier. Before you buy an item of clothing or a gift for someone, see if you can spend less with a discount code.

Saving As A Student

If you’re enrolled in a degree program, talk with your financial advisor to be sure you have availed yourself of all possible scholarships and grants to help pay for your education. A professional can help steer you in the right direction.

Try to buy your books used whenever possible or shop online to see if there is a better deal to be had than in your university’s bookstore. See if you can befriend anyone who is in a class you know you’ll be taking next year and offer to buy their books from them.

More DIY, In The Kitchen

Grabbing food on the go is a great way to watch funds stream out of your wallet and into someone else’s. It is fun and entertaining to go out to eat, but your budget may not allow many splurges like this if you goal is to be debt free. Once you are, you’ll have more extra spending money than ever before, so this is’t a life sentence, just a temporary tweak.

Slow cookers are a huge asset to apartment dwellers or people who don’t fancy cooking. You can load economical food choices like rice, beans and cheaper cuts of meat into the slow cooker and let it do the work for you.

If you want to simulate the experience of going out with friends, try a night of co-cooking once a week. You and your friends can each bring a dish to pass or bring ingredients to the host’s home and everyone can cook together before sharing the benefits of companionship and a great meal.

Get Started!

If you can employ these ideas and get excited enough about them to believe in them, they will work for you. If you have a little money stashed, call your creditors and try to negotiate the debt. If you can do this with even your first, biggest debt, you’ll be well on your way to ridding yourself of the rest. The plan works, so just work the plan and stay positive about the steps you are taking to master your financial future.

Introducing the Roth IRE

Oh man. I might be going to personal finance hell for this one, but ya gotta at least hear me out. You’ve all heard of the Roth IRA right? You know, it’s a crazy awesome type of Individual Retirement Account. Well, today I would like to introduce you to a new concept. The Roth IRE. That’s right. An Individual Retirement Emergency fund.

If you’ve heard of the Roth before, you probably know the annual contribution limit is $5,000. You probably also know that Roth contributions are made with ‘after-tax’ money. What you may not know is this tasty little morsel: Anyone can withdraw their Roth IRA contributions at any time, without penalty. No, you can’t withdraw earnings, but the contributions are free game.

So here is what I’m thinking. I currently have $10,000 in my E-fund. Currently, that’s about 6 months of expenses. Once I get hitched, however, that $10K only becomes like 3 to 4 months of expenses. This means I am faced with two goals that will soon conflict one another. My goal to have 6 months in an E-fund vs. my goal to fully fund my Roth every year. Unfortunately, I can’t do both at the same time. Either the E-fund savings takes precedent, or the Roth contributions become priority.

This is why I have decided to intertwine the two goals.

I’m yet to contribute a single dollar to my Roth this year, as I’ve been aggressively paying down my student loans and saving for things like my wedding. This hasn’t left me with a ton of flexibility in my cash flow. What I plan to do is save $5,000 as quickly as possible. I’ll contribute to my Roth IRA in three increments (a $2,000 contribution and two $1,500 contributions…I’ll explain why I don’t dollar cost average in a future post). Since I will be diverting all of my discretionary income to my Roth, my E-fund will remain stagnant.

The chances of me actually needing access to my E-fund are slim at best. I have a very stable job, am in pretty good health (knock on wood), and don’t have a ton of expenses. Since I’m 96.3% sure I wont be using my E-fund any time soon, I’d rather contribute to my Roth and maximize it’s earning potential.

If, by some freak chance, I end up unemployed I’ll first use my $10K savings. If I am still jobless after three or four months of hunting, I can always tap in to my Roth. Yes, I know, using a retirement account as an E-fund is a personal finance sin, but if there is no tax penalties it’s not so dumb. Besides, it will only take me a few months (after I’ve contributed to my Roth) to build up my E-fund to a true six months worth of expenses, so the window for me to be “up a creek without a paddle” is very small.

What do you think about the plan? Would you contribute to your Roth or E-fund first? Anyone else out there do what I’m doing and use the Roth as a “short term” E-fund option? Any financial know-it-alls see any flaws in my game plan?

Net Worth: May 2010

Can I get a booya for a HUGE leap in my net worth? If the month of April were a person, I would probably want to make babies with it…unless it was a guy, then that would just be weird. Seriously though, I had a great month. I paid down a ton of money on my student loan and am oh-so-close to being debt free.

Here’s the breakdown…

Checking Accounts: $3,160, +$492. Looks like it’s time to transfer some money from my checking account again. April was one of my three paycheck months so my income was rather generous. Why can’t every month be three paychecks?

Savings Account: $14,712, -$8,613. Well I’m a whole heck of a lot more cash poor. I told you I had some tricks up my sleeve in last months net worth report. That trick my friends involved taking $10,000 from my savings to throw it at my student loan. Fortunately, I was able to scrounge up $1,400 to put back in there to make the total only $8,600. I have $10,000 in an E-fund, $2,022 for temporary savings, and $2,681 left in the wedding fund.

Roth IRA: $14,826 +$336. I have fully contributed to my Roth since my senior year of college. I’m hoping to be able to scrounge up the money to do so again this year!

TSP (401K): $14,542, +$947. The standard 5% contribution heads this direction each month. I also get that 5% fully matched. Free money is the second greatest thing in the world. The first greatest thing, of course, is JUSTIN BIEBER.

Student Loan: -$4,287, +$10,208. Do you know how good it feels to have this sucker ALMOST paid off. I am so close I can taste it. If all goes according to plan, I should be debt free by August. Are you excited for me!?

That put’s me at a net worth of $41,789!!! I’m up +$3,895 from last month which may or may not TOTALLY TURN ME ON! Bow chick a bow wow. I don’t suspect having another big month like this for a while. It was a rather large jump for a few reasons. 1) Three Paychecks 2) $360 in blogging income 3) $240 in tutoring income 4) Overall good spending habits. Just goes to show if you spend less than you make, things work out.

Thanks for stalking me checking in on yet another net worth update. See you tomorrow 🙂

**If you have wondered why the blue bar (debt) in the graph sometimes increases, it’s because my credit card balance gets taken in to account each month. Even though I pay the balance in full it still appears as a “liability” in Quicken. I just deduct this from my checking account balance to give myself an accurate net worth reading. This is why my actual NW increase, may not always necessarily match with the totals of each category, but I promise the overall total is REAL. I chose not to include possessions (including my car) in my NW calculations, which would probably increase my worth by about $8K.**

Is this “good” debt?

It’s time to help another PDITF reader out. Jane sent me an email. It says…

You’re all about debt reduction and I can get on board with that, but we (hubby and I) are contemplating getting into business for ourselves.  Would this be acceptable debt (in your eyes)??  We’re looking at possibly $50k with the potential to recoup in the first year (or two if we actually want a salary in that first year, which is what I’m leaning towards).  We DO have some savings, but that would leave us with NO emergency fund (and me, VERY uncomfortable).

So do I think taking on debt to start a business is a good move? Not knowing all of the details (interest rate on loan, type of business, success of similar companies, amount in savings, annual income, etc) it’s hard to give Jane a completely detailed response, but I’m gonna do my best….

Jane, DON’T FREAKIN DO IT! In fact, I’d rather squirt lemon juice in my eyes than start a business with credit.  Why you ask?

Well according to the U.S. Small Business Administration, three out of ten new businesses fail within two years, and only half survive five years. If you could cash flow the business, I’d say go for it. But financing a business that is just as likely to fail as succeed, is no bueno in my opinion.

Honestly, I think Jane answered her question with the information she provided in her last sentence. By starting a new business she would deplete what little savings she has, she would have NO cash in the event of an emergency, and she would be the proud new owner of a crapload of debt. There is no way I can, in good conscience, recommend she put herself in such a stressful situation.

Obviously I don’t know what type of business she is looking to start. If it’s going to be the next Microsoft or Facebook, then she should probably ignore my advice and take on the debt. But let’s be real, the chances of that happening are the same chances that Ricky Martin was ever straight.

Here’s my advice Jane: Keep working hard. Save up as much money as you can. Build your business slowly. And pay cash as you go. If you do this, you’ll have a lot less stress and a ton more freedom when it comes time to open your business. And if said business does in fact fail, you at least can walk away with no financial obligations. I couldn’t imagine a worse feeling than being $50K in debt, 3 years out of the workforce, and have NOTHING to show for it.

So PDITFers what’s your recommendation to Jane? Would you ever take on debt to finance a business? Is it too risky? Anyone out there think she should go for it? Help a sista out!

Net Worth: March 2010

I’ve got a crush on the last 30 days, because my NW soared. I want to fly like an eagle, I want to run through the halls of my high school, I want to shake my money maker (those are all song lyrics in case you didn’t catch on). My net worth is on the up and up, and daddy likes what he sees. I have a strong tutoring and blogging month to thank for the increase. Let’s take a look at the grizzaph…

Checking Accounts: $1,983, +$106. Made some transfers from checking to the good old INGdirect savings account. I love ING. They don’t pay me to say that, but I wouldn’t mind if they wanted to…you hear that ING… Give me your monies!!!!

Savings Account: $22,765, +$1,700. I’m WHOREding (haha get it!) cash for the time being, until I get a better grasp on what lies ahead. I’ll be using about $4K of this shortly to pay for my upcoming honeymoon. Check back tomorrow to see why I’m willing to give up 4 grand for a vacay.

Roth IRA: $13,539 +$171. I have fully contributed to my Roth since my senior year of college. Right now my account balance is about $700 less than my total contributions. Hopefully soon, I will have actually made money from investing!!!!

TSP (401K): $12,313, +$554. The standard 5% contribution heads this direction each month. I also get that 5% fully matched. Can’t pass up free money now could I?

Student Loan: -$15,612, +$391. Yeah I know, some of you hate me for hanging on to my student loan debt, when I could pay it off. I’ve paid it down $13K in the last two years, that’s got to count for something though…right?

That put’s me at a net worth of….drumroll please….. $33,525!!! I’m up $3,291 from last month, which makes my heart smile. My next paycheck should have my increased salary in it, so I’m hoping for bigger and better things in the coming months!!!

**If you have wondered why the blue bar (debt) in the graph sometimes increases, it’s because my credit card balance gets taken in to account each month. Even though I pay the balance in full it still appears as a “liability” in Quicken. I just deduct this from my checking account balance to give myself an accurate net worth reading. This is why my actual NW increase, may not always necessarily match with the totals of each category, but I promise the overall total is REAL. I chose not to include possessions (including my car) in my NW calculations, which would probably increase my worth by about $8K.**