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Putting yourself on the path to a better retirement

save more for retirement with these tips
September 26, 2017

By Alliant Credit Union

You’re already serious about securing a comfortable retirement, but it’s never too late to make adjustments to make it even more rewarding. Whether you’re halfway there, or even less than a decade away, you can still boost your retirement savings using a few smart methods. 

Rethink your 401(k) contribution.  

Whether you have a new job or have been at the same one for thirty years, it’s important to make sure your 401(k) contribution isn’t too low. For example, many companies automatically enroll employees into a 401(k) plan at a default savings rate of only 3%, which is usually too low to retire comfortably. A better percentage is at least 10% for any age—if you’re over the age of 40, you should try to contribute 20%, even if your employer does not match up to that amount.

Don’t forget to rebalance.
 
Many choose a “set it and forget” approach to their 401(k), when in fact your investments ought to be reconsidered periodically. This is not to say you should rethink your investing strategy based on the market, but you might need to reevaluate your risk tolerance. Some kinds of growth, while overall good, can put your savings at greater risk than you initially anticipated. Check out these five simple steps to rebalancing your portfolio from NerdWallet.

Consider a “robo-advisor.”

Traditional wealth management services are vital, but you can try supplementing them with a “robo-advisor” such as Betterment or Wealthfront. This 100% algorithm-driven approach can help you focus on your goals without minimum balance requirements. In the end, financial advisors offer value and provide things computer programs can never do. But not to worry, you wouldn’t be turning your money completely over to the machines. Many of these services also offer a human component.

Explore the benefits of an HSA.

Opening a Health Saving Account (HSA) is a way to pay for current and future health care costs without having to dip into other investments. Contributions are tax deductible, and some employers makes contributions that won’t be counted as part of your taxable income. Also, any dividends or interest you earn will also grow tax free. However, beware of making withdrawals that aren’t related to medical needs, as the amount you withdraw will be subject to income tax and could be subject to an additional 20% tax.

Delay your Social Security payments.

You may want to think about waiting until age 70 to start receiving Social Security benefits because you could get even more money each month. For example, depending on your annual salary, if you start receiving social Security at 62, your benefits would only by $18,000 compared to $31,680 at age 70. So, if you can hold off during your 60s, you’ll be rewarded nicely with a big paycheck. 

It’s understandable that you want to get the most out of your hard-earned retirement savings, and Alliant will be here to help at any stage. Talk to one of our financial consultants today if you have any additional questions.