Saving for retirement. It’s a thought that always seems to pop up in our minds now and then as we get older. Maybe this year I’ll start putting away a little more for my retirement. Or perhaps I can start saving some money each month. Or maybe not. Retirement planning is something we all need to consider, but sometimes we fall short and neglect our preparations. Sometimes we can fall short on saving for a long time. It happens to the best of us. So, if it’s been a while since you’ve taken financial action, we’ve got some tips to help you start catching up on retirement savings.
What is critical to remember is that you have to look forward, never back. If you’ve procrastinated or just put off saving more for retirement, don’t keep beating yourself up about it. What is in the past is in the past. It’s time to look ahead and take control of your savings. Focus your energy on what you could be doing now to make a difference for your future retirement.
The first piece of information you need to consider is how much income you’ll need as you approach retirement. Now, this isn’t always the easiest and most clear decision to make. How much do you genuinely need to live in retirement comfortably? This is where a retirement income calculator comes in handy. These tools will help you get a simple idea of what your retirement income should be, based on different factors like current income and savings.
Once you have the goal of your ideal income in mind, you’ll have something to stay on track with and work towards actively.
It is also essential to think about at what age you’d like to retire. Determining when you’ll retire will impact your savings timeline, affecting how long you have to save for your ideal retirement income. Depending on when you want to retire, you’ll have to change your strategy. If you’re going to retire sooner, say in 20 years, you’ll have to save much more money in a shorter amount of time than someone who’s been saving since they were in their 30s. If your retirement income goal isn’t realistically achievable within your ideal timeline, you may need to work a couple more years to build your savings.
As you get older and have been working for some time, you are likely to be earning much more. By the time you reach your 40s or 50s, you’ll have the potential to make larger contributions to a TFSA (tax-free savings account) or an RRSP (registered retirement savings plan). Start planning to make more significant contributions now while you can and let the savings grow as you make the maximum contributions each year.
The most painless and surefire way to ensure that you are continually saving for your retirement is to make automatic contributions to your accounts. Think about what stops most people from making contributions to their retirement savings. What comes to mind? Making the contributions themselves! Saving for retirement becomes much more difficult for people when they have to remember to make deposits into their savings accounts.
With automated deposits, you never have to worry about remembering to move money around or make deposits. This helpful feature allows you to forget about the funds entirely. When you forget about the money, you never worry about it—saving for retirement made easy.
Earning more money goes a long way to helping you save for your retirement. The easiest way to go about increasing your income is to ask for a raise from your employer. Aside from asking for a raise, you can look into earning extra income outside of your regular day job. You can start a personal side business on the weekends or whenever you have time to help generate additional funds.
Hobbies can be a great way to help you generate more income. Do you like graphic design? Or woodworking? Or maybe you could also act as a consultant for another company inside your current line of work. Take a look at what you are passionate about and see if you can use it to make some extra money. If you don’t want to start a side business, you can also look into getting a side job that you can handle on your off-hours. Increasing your income in any way can be a considerable benefit in catching up on retirement savings.