According to investment management specialist Vanguard, the average workplace balance of 401(k) plan participants topped $100,000 for the first time end of 2013, nearly doubling from where it stood at the end of 2008. This looks great if you are young and have time to save, but if you are in your 50s or 60s, you need to introduce some additional strategies to help you boost your bottom line.
1. Consistency rules
You’ll see good times and bad times, but the trick is to maintain your contributions and give as much as you can. The old rule of thumb was to contribute 10 %, but if you’re well along the path, you want to think about getting as close to doubling that as possible. And if you are just turning 50 this year or if you are older, be sure to take advantage of the $6,000 catch-up contribution that is available to you.
2. Don’t be afraid of some risk
Your investments won’t have as much growth potential if you don’t take some risk. Based on your age and your risk tolerance, you should consider being more heavily involved in some risk the younger you are. As you get closer to retirement, then you can start thinking of putting a larger percentage in more conservative investments.
3. Leverage the security in social security
Use Social Security to your benefit. Read up on when and how you should start taking it, as there are pros and cons to many options. For example, if you delay taking your benefits, the income you receive down the line will be bigger. If you take it early, your checks won’t be as much, but you’ll get more of them.
When it comes to your retirement nest egg, your goal should be to have the absolute maximum amount accumulated for your retirement. Make sure you discuss your long-term plans with your financial advisor. If you do not have one, Mooney Lyons can help. Visit us at mooneylyons.com. We can analyze the needs you have now and anticipate those you’ll need in the future.
Investing involves risk including the loss of principal.