Fell Behind on Retirement Savings in 2021? 15 Ways to Catch Up in 2022
Grow your savings this year
You'll need personal savings to enjoy a financially comfortable retirement. If you've fallen behind in that regard, here's some good news -- you can make 2022 the year you get back on track. Here's how.
1. Get on a strict budget
Following a budget will help you manage your money more carefully. And that could open the door to more generous IRA or 401(k) plan contributions. You can set up a budget using a basic spreadsheet, or go old school and create one on paper. There are also different apps you can use to track your spending.
2. Slash one large expense
Cutting back on one big expense category could make it easier to ramp up your 401(k) or IRA contributions. Think about the things you spend the most money on and figure out a way to cut back in a single area, whether it's housing, transportation, or food.
3. Cut a series of smaller expenses
You may not be able to easily slash one of your largest expenses. But cutting back on smaller bills will help free up money for your retirement savings, too. Once you have your budget set up, you can more easily identify smaller expenses to reduce.
4. Consolidate your credit card debt
The lower your monthly debt payments, the more money you'll be able to pump into your IRA or 401(k). If you owe money on a number of credit cards, see if you can consolidate that debt -- and make it more affordable -- by doing a balance transfer. It especially pays to go this route if you qualify for a 0% introductory APR.
5. Refinance your mortgage
The less you spend on housing payments, the more money you'll have available to fund your 401(k) or IRA. If your credit score is in good shape, it pays to apply to refinance your mortgage. Getting a more affordable home loan could also help your overall financial picture improve.
6. Automate your savings
The great thing about 401(k)s is that contributions are deducted directly from your earnings. IRAs don't always work the same way -- but they can. All you need to do is find one with an automatic savings feature. From there, you can arrange to have money from each paycheck land in your retirement plan so you're socking money away off the bat.
7. Bank your 2022 raise
If your pay is getting boosted in 2022, you have a prime opportunity to save more for retirement. Simply send your entire raise into savings since it's not money you were used to spending anyway.
8. Send any bonus cash you get into your retirement account
You may come across extra money in the course of 2022, whether it's a tax refund or a reward for doing well at work. If you don't have pressing bills to pay, send that bonus cash into your long-term savings.
9. Get a side hustle
Boosting your income with a second job could be your ticket to growing your IRA or 401(k) this year. It pays to explore different side hustle options, whether it's walking dogs, doing data entry from home, or utilizing a specific skill you have to make extra money, like writing content or designing websites.
10. Snag your full 401(k) match
Many companies that sponsor 401(k) plans also match worker contributions to some degree. Be sure to take advantage of your full employer match this year so you can sneak as much extra money into your retirement plan as possible.
11. Invest aggressively for added growth in your retirement plan
If retirement is many years away, it pays to load up on stocks in your retirement account. That way, you'll give your savings a chance to generate substantial growth -- enough growth, perhaps, to make up for years when you didn't contribute as much as you would've liked to.
12. Take advantage of catch-up contributions
If you're 50 or older, you're entitled to catch-up contributions in your retirement plan. If you have an IRA, you can put in an extra $1,000 this year. With a 401(k) plan, your catch-up maxes out at $6,500. Either way, that extra money could go a long way toward helping you meet your goals.
13. Think outside of an IRA or 401(k)
While it makes sense to save for retirement in an IRA or 401(k), you're not limited to these plans alone. A health savings account, or HSA, for example, can also help you build savings for retirement. You can even put money into a traditional brokerage account and earmark it for retirement if you've maxed out your IRA or 401(k) and have extra cash available.
14. Set a specific goal
Sometimes, having a savings goal in mind makes it easier to stay on track. Think about the amount of money you want to put into retirement savings this year and then map out a plan to get there.
15. Remind yourself of the consequences of not catching up
Closing out your career with a subpar retirement plan balance could have negative consequences, like having to delay retirement and enduring financial struggles during your senior years. It wouldn't hurt to occasionally remind yourself of those repercussions, because that might motivate you to increase your savings efforts.
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