6 ways to help grow your retirement savings
If you worry that you won't have enough saved for retirement, here are six ways to turn anxiety into action.
From the Merrill Edge Minute e-newsletter.
1. Max out your contributions
Contribute the maximum to your 401(k) account and/or IRA
, including catch-up contributions for people age 50+. Once you've contributed the maximum amount, consider also contributing to other types of investment and/or savings accounts.
2016 and 2017 contribution limits1
||Under age 50
||Age 50 and older
* IRA contributions for 2016 and 2017 can be made through the tax filing deadline — generally, April 15th. If April 15th falls on a weekend or holiday, the deadline typically is the next business day. The tax filing deadline for the 2016 tax year is April 18, 2017. IRA contributions for 2017 can be made through 4/15/2018. 401(k) contributions for 2017 can be made through 12/31/2017.
You should review the terms of your employer's 401(k) plan to determine if catch-up contributions are permitted and whether additional contribution limits apply.
2. Downsize your home
Selling your home to downsize
could provide additional money to invest, not to mention provide savings on property taxes, utilities and other expenses. Plus, downsizing allows you to pare back your possessions so there is less to move and less to take care of. If you sell the items, you might invest any proceeds as well.
3. Save more, spend less
Cut back on your spending to save more. For example, getting a few more years out of your car instead of buying a new car could potentially free up thousands of dollars to invest.
4. Turn a passion into a way to generate income
Do you have an interest you enjoy that might also generate income? Starting an entrepreneurial venture on the side now — while you're still employed — might give you extra money to invest. If the business goes well, you might even consider switching to it as a second career. Working for yourself — in an area you're passionate about — can also make working longer in life more enjoyable.
5. Stop making allowances for your kids
Still supporting your adult children? It may be time to nudge them toward independence. Paying for less of their expenses lets you allocate that money to your retirement, which may have taken a backseat to their needs. If your adult children live at home with you, consider having them contribute to the household with monthly "rent." They also can benefit from the financial lessons involved.
6. Consider delaying Social Security
You can opt to start taking Social Security benefits as early as age 62. But for each year you delay starting those benefits (until age 70), your monthly benefits grow
and that higher payout continues for the rest of your life. The additional income can add up quickly, and becomes even more important as people live longer. We recommend consulting your legal and/or tax advisor before deciding when to start taking Social Security benefits.
Neither Merrill Lynch nor any of its affiliates or financial advisors provide legal, tax or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.
IRS.gov, Oct. 2016.
This example assumes that the gain realized on the sale of the home is not subject to tax because the seller qualified for an exclusion as part of section 121 of the Internal Revenue Code.
Americans' average monthly new-car loan payment in third quarter 2016: $495. Gorzelany, J., "Why The Auto Financing 'Bubble' Is Really an Affordability Issue," Forbes, December 7, 2016. Data provided by Experian.
Hipple, Steven F. and Hammond, Laurel A., "Self-employment In The United States," Bureau of Labor Statistics, March 2016.
Kim, Phillip H., "The Tortoise Versus the Hare: Progress and Business Viability Differences Between Conventional and Leisure-Based Founders," Journal of Business Venturing 30, 2015.
Davidson, A., "It's Official: The Boomerang Kids Won't Leave," The New York Times Magazine, June 20, 2014.
Goldfarb, S., "Who Pays for the 'Boomerang Generation'?: A Legal Perspective on Financial Support for Young Adults," Rutgers University School of Law, 2013.
How Waiting to Collect Social Security Can Boost Your Benefit," Merrill Edge, June 2016.