Four sim­ple ways to save more for re­tire­ment

St. Thomas Times-Journal - - ONTARIO NEWS -

SPE­CIAL TO POST­MEDIA NET­WORK I t’s never too early to be­gin sav­ing for re­tire­ment. While mil­lions of peo­ple have no doubt heard or read those very words be­fore, sur­veys in­di­cate that few peo­ple are tak­ing that les­son to heart.

A 2018 sur­vey from Bankrate. com found that 20 per cent of Amer­i­cans don’t save any of their an­nual in­come. Things aren’t nec­es­sar­ily rosier in Canada, where the fi­nan­cial in­sti­tu­tion CIBC re­ports that 32 per cent of peo­ple near­ing or on the cusp of re­tir­ing have noth­ing saved for re­tire­ment.

Sav­ing for re­tire­ment can seem im­pos­si­ble in house­holds where ev­ery dol­lar counts. But the fol­low­ing are four sim­ple ways to save more for re­tire­ment with­out mak­ing dra­matic life­style changes.

1. Turn raises into re­tire­ment sav­ings.

Ac­cord­ing to the World at Work 2018-2019 Salary Bud­get Sur­vey: Top Level Re­sults, salary bud­gets in the United States are pro­jected to rise by an av­er­age of 3.2 per cent in 2019, while those in Canada are ex­pected to rise by three per cent. Work­ing pro­fes­sion­als can save more for re­tire­ment by con­vert­ing some or all their raises into re­tire­ment sav­ings. Pre-tax re­tire­ment ac­counts al­low work­ing pro­fes­sion­als to put aside money be­fore taxes are paid, so weekly pay­cheques will not be greatly af­fected if you choose to in­crease the per­cent­age of your in­come you de­posit into such ac­counts. Do this each time you re­ceive a raise and your re­tire­ment sav­ings will grow con­sid­er­ably.

2. Put bonuses to work.

Pro­fes­sion­als who re­ceive bonuses can speak to their em­ployer and re­quest that their re­tire­ment con­tri­bu­tion rates be in­creased when bonuses are is­sued. Many 401(k) re­tire­ment plans al­low work­ers to con­trib­ute as much as 80 per cent of their pay­cheques. While that’s not sus­tain­able for most peo­ple ev­ery pay pe­riod, in­creas­ing your con­tri­bu­tion rate dra­mat­i­cally when your bonus is is­sued is a great way to save more for re­tire­ment. Con­tri­bu­tion rates can then be re­turned to nor­mal the fol­low­ing pay pe­riod.

3. Down­size your home.

Empty nesters near­ing re­tire­ment age may ben­e­fit by down­siz­ing their homes. Do­ing so can re­duce util­ity bills, prop­erty taxes and other ex­penses, and those sav­ings can then be redi­rected into re­tire­ment ac­counts.

4. Rein­vest tax re­turns.

Work­ing pro­fes­sion­als ac­cus­tomed to re­ceiv­ing tax re­turns can use that money to catch up on their re­tire­ment sav­ings. Rather than spend­ing tax re­turns or de­posit­ing them into tra­di­tional sav­ings ac­counts, rein­vest them into a re­tire­ment ac­count. Speak with a fi­nan­cial plan­ner to help you fig­ure out how to ac­com­plish this goal. Even if it re­quires open­ing a new ac­count, the long-term ben­e­fits or rein­vest­ing re­turns are sub­stan­tial. Sav­ing for re­tire­ment is im­por­tant, and it’s never too late or too early to start set­ting aside more money for your golden years.

Hand­out/Post­media Net­work The fol­low­ing are four sim­ple ways to save more for re­tire­ment with­out mak­ing dra­matic life­style changes. Photo cour­tesy Metro Cre­ative Graph­ics

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