How to Pay the Bills Now and Pay for Retirement Later

No matter where you are in your working life, retirement savings probably comes in low on your list of financial priorities. After all, you’re busy building your life and career. You have to cover the basics like mortgage, cars, utilities, insurance, and healthcare; then meet the demands that life brings like kids, college, unexpected accidents, and rising costs of just about everything. How are you supposed to focus on long-term goals when short-term responsibilities get in the way?

Most people can relate to that challenge. Did you know that 85% of working age people in a worldwide retirement survey1 said that retirement is not their main savings priority? So what can you do now to save consistently for the future? These tips may seem obvious, but they’re tried and true ways to develop a serious savings habit:

Make saving automatic.

With so many things to manage in life, apps and devices have become an essential tool to ease our everyday burdens. It only makes sense to use digital automation when it comes to retirement savings. Sign up for payroll deduction to effortlessly contribute to your employer’s 401(k) or other plan. If you have a Traditional or Roth IRA, set up an automatic sweep or periodic deposit that ensures you make the annual contribution limit.  Don’t have a retirement account? Arrange for automatic transfers into your savings account through online banking. 

Get yourself an IRA.

Maybe you don’t qualify for an employer retirement plan because you work part time, or you’re an independent contractor, or you recently joined a company plan with a waiting period. One of the smartest ways to save for retirement is with an IRA because you can take advantage of tax benefits and compounded earnings. If you’re over 50, you can catch up on retirement savings with an extra $1,000 in Traditional or Roth IRA contributions each year. If you’re self-employed, a SEP IRA may help you save and deduct even more.

Give your savings rate a raise.

When you get promoted or receive a salary increase, what’s your first thought? Spend! It’s natural to want to reward yourself for your accomplishments, but think about paying yourself instead. If you have an employer plan that matches contributions, make sure you’re at least meeting the limit. Some employer retirement plans let you to set an automatic increase in contributions, but if not, make a point to do it yourself.  Even the smallest amounts saved on a regular basis can make a big difference in the long run.

Analyze your investment fees.

Do you know how much you’re paying in fees? Different types of investments carry various fees and expenses, which can be pretty confusing. If your portfolio fees are too high, they can really eat into your savings. For example, a 1% annual fee on a $100,000 investment earning 4% can reduce the portfolio value by almost $30,000 over a 20-year period.2 Find out how fees and expenses may be impacting your portfolio by taking our free online portfolio check-up. Infinity financial advisors can help you strike a balance between expenses, risk, and returns based on your individual circumstances.

Roll over money parked in an old plan.

Have you changed jobs, dropped out of the workforce, or started your own business? Don’t leave money languishing in a former employer’s plan. Keep the tax benefits going by rolling your savings over to your new employer’s plan or into an IRA. Often, there’s a better selection of investments when you move that money out of an old plan. Rollover rules can be complex, so rely on professional financial advice to guide you through the process.

See the big picture with an online portfolio tracker.

Keeping track of your investments and bank accounts can be frustrating. You may not always realize that allocations have gone awry or savings goals have not been met. Online portfolio tracking tools have become an excellent way to manage your entire portfolio in one place. Infinity’s Elevate Digital Portfolio gives our investors the latest technology to consolidate accounts, control costs, and stay on course to their goals.

 

1The Future of Retirement, A balancing act - published in 2015 by HSBC Holdings plc
2Securities and Exchange Commission Investor Bulletin, How Fees and Expenses Affect Your Investment Portfolio
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