Retirement may be more of a fantasy than a dream for many Americans.
Less than 36% of Americans believe that they are prepared for retirement or are on the right track.
Here are four ways to save for retirement that is a decade away.
IRA catch-up contribution
An IRA, or individual retirement account, lets workers save money in a tax-advantaged manner. Any money you or an employer contribute to your IRA is tax-deferred.
And any interest, investments, and earnings on that IRA account are tax-free as well. You only pay taxes on IRA funds on qualified post-retirement withdrawals.
You can legally contribute up to $6,000 annually in an IRA. If you are over the age of 50, you can contribute an extra $1,000 to your IRA annually for a total of $7,000.
401(k) catch up contribution
A 401(k) is an employer-sponsored retirement account. A portion of your salary is contributed to the 401(k) until retirement. And depending on your employer, an employer can match whatever you contribute into your 401(k) from your salary.
As of 2021, you can contribute up to $19,500 annually in a 401(k). If you are over the age of 50, you can contribute an extra catch-up contribution of $6,500 annually to your 401(k) for a total of $26,000 annually.
If you are 50 years or older, you can save up to $260,000 in a decade via your 401(k) to use for retirement.
Downsizing is the act of aggressively living below your means in every way. You don’t have to live like a pious monk, but downgrading makes you ultra-aware of how you may be wasting money.
For example, you can stop buying every brand-name product. If you stop buying brand-name grocery products, you could save up to $1,000 annually.
Sell your home and move into an apartment. Move closer to your job and sell your car.
Sit down, look at your budget and think of every way you can begin financially downsizing your life.
Delay your Social Security benefits for as long as possible
You don’t have to start receiving your Social Security benefits at age 62. You can delay receiving your Social Security benefits until age 70 at the latest.
And the longer you delay receiving your Social Security benefits, the more you financially benefit.
If you wait until age 70 to begin receiving your benefits, you will earn 132% more on top of your traditional benefit.