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How To Catch Up On Your Retirement Savings

How To Catch Up On Your Retirement Savings

We are all looking forward to a time when we can relax and enjoy ourselves without worrying about such trivial things as getting up early or finishing a report. Going through different schools and then several jobs throughout our life teaches us to treasure the precious moments we have to ourselves, but sometimes we can focus so much on this cycle of “work hard – play hard” that we lose sight of the bigger picture.

Many of us tend to spend money on vacations, drinking with friends, gadgets and food in an effort to make the most of our free time, and it isn’t until we hit 40 or 50 that we begin to think about our retirement savings, or lack thereof. Even if you have been leading a somewhat hedonistic lifestyle and not really thinking about the future, you can still catch up on your retirement savings with these few simple strategies.

Generate some additional income

It’s easy to get used to a lifestyle of unrestricted spending, but the problem with such a lifestyle is that you’ll have very little money left over each month, money that could have been tucked away in your bank account. A quick fix is to find a way to earn some additional income. Part-time jobs can give that extra bit of cash you need, but you can also use your skills. You may be able to:

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  • Offer tutoring – you can give lessons to others on anything from music and dancing, to cooking, math or a foreign language. Whatever knowledge and previous experience you have can be put to good use.

Violine lessons
    • Do some freelance work – people need a lot of different services, ranging from ghostwriting and translating to designing and programming, or even bookkeeping, accounting and legal advice. You can do this online, from the comfort of your own home. Good places to look for such work are websites like Upwork and Freelancer.
    • Create and sell a variety of items – toys, clothing, jewelry, furniture, paintings and sculptures are just some of the things that you can sell to people if you have some talent and patience. You can end up earning quite a bit this way if you are good.
    • Sell some of the stuff that is collecting dust in the attic – there are always a few old items that we barely use up in the attic, down in the cellar, or just littered around the house. Some of these might fetch a good price.

    Earning extra money will require you to devote a bit more of your time to work, but you can always try to make some money from the hobbies you enjoy doing anyway.

    Cut down on living expenses

    If you catch yourself worrying about life in retirement, it means it’s time to try and cut down on some unnecessary expenses as soon as possible. Effective budgeting doesn’t mean going into the woods and living of the land to save every possible penny – it’s just about making smart decisions, prioritizing and learning to do without certain luxuries.

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    Pink piggy bank surrounded by stacks of gold coins.

      Looking for things that are on sale, buying in bulk, switching to a more cost-effective brand and using your DIY skills are all great money-saving tactics that don’t require you to significantly lower your quality of life. Being careful about how you spend your money means you will have more funds to put aside, which brings us to our next point.

      Catch-up contributions

      In the US, for people who have hit 50, the best strategy is to put as much money into your 401k as you can. Some company retirement savings plans allow you to put additional funds into your 401k by way of reducing your salary by said amount. You get a bit less money per month, but it goes into your retirement fund and you get a tax deduction. These catch-up contributions can go all the way up to $5,500, which can make a big difference in the long run. Other countries such as Canada and Australia have similar schemes, so check out what is available in your locality.

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      Consider an IRA rollover

      An IRA gives you a greater freedom and because the penalties for early withdrawal are far less than with your typical 401k plan, you have the option of making good use of your money a bit earlier, e.g. in case of emergency or tempting investment opportunity. Experts agree that rolling over your 401k into an IRA is a good option for those who haven’t put much thought into their retirement fund for years and want to catch up quickly. You also have the catch-up contribution option with a maximum of $1,000 on both traditional and Roth IRAs.

      Move to a smaller home

      Sold Home For Sale Sign & New House

        If you are in your late forties or early fifties, chances are you’ve sent your kids off to college, and if you live alone there is not a whole lot of need for huge amount of space. Moving into a smaller home in a quiet neighborhood – or perhaps an apartment in the city – and selling your old house can be a good way of infusing your bank account with a large sum of money, as well as drastically cutting costs on maintenance.

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        There is no need to panic if your retirement fund doesn’t look that good and you’re already pushing 50 – with a bit of strategic planning you can implement money-saving measures, get some additional income on the side and do a number of different things to ensure that you can spend your retirement relatively carefree.

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        Ivan Dimitrijevic

        Ivan is the CEO and founder of a digital marketing company. He has years of experiences in team management, entrepreneurship and productivity.

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        Last Updated on April 28, 2020

        9 Millionaire Success Habits That Will Inspire Your Life

        9 Millionaire Success Habits That Will Inspire Your Life

        As technology evolves and information becomes more accessible, it has also become more challenging to define success. A lot of people are trapped in the rat race while trying to discover the actual formula for success.

        You could become overwhelmed with what tools, techniques or philosophies to imbibe while trying to get tips over the internet. At every click and turn, there are ‘how-tos and quick-fix’ on how to become successful overnight. You will find several courses, articles, videos and books on how to achieve financial success.

        But what if I tell you it doesn’t have to be complicated as people made it out to be? What if you could achieve success by merely following these 9 millionaire success habits?

        1. Read for Personal Development

        A daily habit I have discovered millionaires share in common is reading. For instance, if you are an entrepreneur, you need to read to become an efficient leader and a productive business owner. Reading helps you to grow and learn without going to a business school.

        A research conducted by Thomas Crowley indicates about 85% of self-made millionaires read at least two or more books each month. [1] Warren Buffett is one of these examples. He spends 80% of his day reading. In the early days of his investment career, he would read 600 to 1000 pages in a single day.

        While millionaires sometimes read for pleasure, they also learn to improve themselves. They read topics on leadership, how-tos, self-help, biographies, lifehacks and also follow current events.

        Here’re some recommendations for you: 25 Best Self Improvement Books to Read No Matter How Old You Are

        2. Establish Multiple Sources of Income

        Another success habit I noticed about successful people is that they don’t depend on a single income source. Every millionaire possesses multiple sources of income. This helps them to manage economic challenges and also make more money.

        They are passive income addicts. They earn interests from loans, rental income from real estate, royalties from intellectual properties, dividends from investments. They also launch a side business or run a website or sell information products.

        How income is made either passively or actively is what separates the successful from the wannabes. They are always learning ways to build multiple streams of income.

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        3. Live on a Stipulated Monthly Budget

        An average millionaire does not believe in luck and jackpot. They take the time to understand cash flow-income and expenses. Based on this, they establish a monthly budget and religiously stick to it.

        The essence of the budget is to minimize unnecessary expenses. This will help you gain complete control of your financial life. Budgeting helps you to avoid overspending to achieve your financial goals. Here’re some tips to help you stuck to your budget: 32 Hacks for Sticking to Your Budget

        4. Manage and Maximize Money

        The most significant education for a millionaire is financial intelligence. Nobody attains financial freedom without gaining financial intelligence. This is the more reason millionaire, regardless of their income, keep their knowledge about tax strategies updated.

        They always seek to reduce their tax bills. One approach they employ is by living or incorporating their business in states with no income tax.

        Do you know that about 60 companies paid $0 legally in the 2018 tax year? Some of these companies that ‘avoided'(note: not evaded) federal income tax include Chevron, Amazon, Halliburton, General Motors, Delta. Their US income was totaled at $79 billion with an effective tax rate of -5%.

        What’s the deal? They got a tax refund.

        How do they accomplish these?

        An ITEP report indicated that they have the culture of throwing huge sums at tax experts who assist them in discovering creative, as well as convoluted means of paying little tax as much as possible.[2]

        5. Avoid Debt

        Another habit that separates the millionaires from the rest of the world is how they manage debt.

        They don’t live an extravagant lifestyle; instead, they only buy what they need and can pay for. They do not book hotels and flights by using their credit cards to pay for them.

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        They are conscious of the interest rates even when they use credits cards or take loans. If possible, they try to pay with cash because of its zero percent interest rate.

        6. Set Daily Goals

        It does not matter if they are setting up a business, a career, or financial projections; they have the success habit of setting short term goals. They plan daily and weekly goals to generate momentum in achieving their long-term goals.

        Ensure you prioritize when setting daily goals. This will help you to achieve the most important to-dos on your list.

        Setting priorities will help you to focus on highly rewarding activities. If you desire financial freedom, it is wise to pursue activities that earn you thousands of dollars rather than hundreds of dollars.

        7. Don’t Act Rich

        The goal is not to act rich but to be productive. Interestingly, Thomas Stanley buttressed in his book that for the most prestige brands of cars, about 86% percent are toys of the non-millionaires. While most believe that people with huge fortunes tend to drive exotic cars, in reality the largest consumers of pricey cars are aspiring millionaires.[3]

        According to findings by Experian Automotive Researchers, 61% of individuals who earn $250,000 or more rarely buy luxury brands. Instead, they buy Hondas, Toyotas, and Fords like the rest of the world. The reason is they are not ready to spend money on premium cars that tend to drop in value in a couple of years as it would cost money. Millionaires invest in assets that appreciate.[4]

        8. Own or Buy Businesses

        In Robert Kiyosaki’s cashflow quadrant, he divided how you earn income into four quadrants. The E and the S quadrants take the left position while the B and the I are on the right side. According to Robert, it is possible to be on all quadrants, but the millionaires are not.[5]

        • E stands for employee – they work for others
        • S stands for self-employed – they work for themselves
        • B stands for a Business owner- employees work for them (500 or more employees)
        • I stand for Investors – Money work for them like Warren Buffet.

        Your goal is to move from the left quadrant to the right quadrants where you own big businesses or make money work for you.

        It is possible to become financially successful by pursuing what you love. For instance, if you love writing, aspire to be the best seller. Wealth and passion work together.

        Check out How to Start a Small Business with Little to No Money for tips.

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        9. Avoid Get-Rich-Quick Scheme

        A millionaire holds patience as an essential virtue. It takes patience to become successful, not only in finance but in every aspect of life. While it is possible to become financially successful at an early age, most millionaires hit it at age 50. They live a moderate life, invest in their future and retire rich.

        Bonus: How to Develop the Millionaire Success Habits?

        Having learned these habits, the next question is,

        How can I develop the Millionaire Success habits?

        Here are six values you will need to develop:

        Establish Your Life Vision

        You need to be clear about what you want in life to set yourself for a life of success. Your vision has to go beyond becoming a millionaire to understanding why you want to become one. Any great entrepreneur you will ever find has a clear vision and an established mission.

        Understanding why you are doing what you do will drive you to become the kind of successful person you want to be.

        Make Your Passion a Profession

        When your passion becomes your profession, work becomes pleasurable. Loving what you do enables money to flow to you and through you.

        So what’s going to be? Wake up every morning by speaking positive words into your work, love what you do, and focus on the work that brings you joy.

        Take a look at this article and learn how to make it happen: 5 Steps To Turn Your Passion Into A Career

        Focus on Solution

        Focusing on the solution means establishing the problem that you or your business address. This will help you focus on the solutions when others are faced with challenges.

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        A millionaire has a mindset that is fixed on the solution. He or she knows there’s a way out, and that every problem is an opportunity in disguise.

        Improve your problem solving skills with these tips: 6 Effective Ways to Enhance Your Problem Solving Skills

        Develop Your Leadership Skills

        Leadership skills are an asset that is indispensable if you want to develop a millionaire success habit. The more you hone your leadership skills, the more you will attract leaders who share your values.

        Be Growth-Focused

        Millionaire entrepreneurs prioritize self-improvement. Here’s how to achieve it:

        • Get a coach. Coaching will impact your life, and you will achieve peak performance in life and business when you have a life coach.
        • Be coachable. It is not enough to have a coach; you must be coachable. Sometimes, you need feedback and counsel to reposition your life and business. A coach has the wisdom and experience to counsel you from a higher perspective. The more you receive feedback and work on yourself, the more you become better at what you do and who you are.

        Flip Your Thought Pattern From Acting To Being

        It is not enough to have a millionaire success habit, you must also become a person of positive influence. This is how you can become significant. Bill Gates is not only rich; he is changing lives in Africa and different parts of the world.

        If you want to become successful, you must first be and think like a successful person. This is how resources you need can flow into your life.

        Here’s a final thought from me:

        It is not enough to do something to have something; success is about being someone who possesses what is needed to take positive and inspired actions.

        More Success Habits

        Featured photo credit: Austin Distel via unsplash.com

        Reference

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