You're doing everything the experts recommend. Deferring a chunk of your salary to your 401(k) at work, at least up to the company match, attending the educational seminars, investing in a diversified portfolio -– what else can you do to secure your future retirement? The one thing more than a third of Americans with a 401(k) have never done: increase the amount they automatically contribute.
A new TIAA-CREF survey says that while many of us have never raised our deferral, 26 percent haven't kicked-up what they kick-in in over a year. With 44 percent of the U.S. workforce saving 10 percent or less of their annual income for retirement, that's a problem. Many financial advisers say we should be putting aside 10 percent to 15 percent -- even more as we age.
One of the best times to increase your contribution is when you get a raise. Most of us (57 percent) don't do that. More men (33 percent) than women (17 percent) are likely to be contributing the maximum amount allowed -- and thrifty millennials are most likely (52 percent) to jack up their contribution after a bump in pay.
Many of us set-it-and-forget-it when it comes to our 401(k) -- and that's a good thing if we're properly invested. One-quarter (25 percent) of workers have never made changes to their investments. If you're in that crowd, it might be a good idea to have an adviser check your allocation, just so you can ignore it with confidence.
But the workers really lagging behind are those who never got started. More than half (53 percent) of employees who work for a company offering a 401(k) retirement plan weren't automatically enrolled in their companies' plans, according to the survey.
Failing to sign up right out of the gate means time is not on your side. In fact, more than a third (37 percent) of respondents who weren't automatically enrolled in their at-work retirement plan said they waited six months or longer to enroll -- nearly one quarter (24 percent) waited a year or more.
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Eliminating your mortgage is one of the best ways to make retirement more affordable because it removes a sizable monthly bill. While you'll still have to pay taxes and maintenance costs for your home, those expenses are likely to be a fraction of your mortgage payments.
Once your children are independent, you will likely no longer need a several-bedroom house in a good school district with a large yard that can be expensive to maintain. Consider downsizing to a smaller home in a less-expensive neighborhood, and add the proceeds of the sale to your nest egg.
Where you live plays a big role in how much you pay for food, taxes and a variety of other services. Moving to an area where the cost of living is significantly less could allow you to spend down your retirement savings more slowly.
If you and your spouse commuted to separate places each day, it is likely that you each needed a car. In retirement, you might be able to get by with one car, thus eliminating the insurance, gas and maintenance costs of the second vehicle. In walkable communities with good public transportation, you may even be able to get by without a car in retirement.
In retirement, income tax will be due on withdrawals from traditional 401(k) and individual retirement accounts, but you can space out your withdrawals to avoid a hefty tax bill in a single year. Prepaying income tax on some of your retirement savings using a Roth IRA or Roth 401(k) allows you to avoid a big tax bill in retirement.
Investing in high-cost funds reduces your return. Minimizing investment costs is especially important for retirees who are living off income from their portfolio. In this case, selecting the lowest-cost funds that meet your investment needs translates to more money in your pocket.
There are significant penalties if you withdraw money from your retirement account too soon or too late. There is also a reduction in benefits if you sign up for Social Security early, and a late enrollment penalty if you delay signing up for Medicare Parts B and D. Pay attention to important retirement deadlines to avoid paying more than you need to.
Health care is likely to be one of the biggest and least predictable costs you will face in retirement. But there are some things you can do to control your health costs. Consider purchasing a supplemental policy to Medicare to fill in some of the gaps and cost-sharing requirements traditional Medicare doesn't cover. Also, shop for a new Medicare Part D plan every year to make sure you are getting coverage for your medications at the best price.
Retirees have the luxury of being able to travel whenever they want. Traveling is often less expensive if you avoid major holidays and school breaks, and most tourist destinations will also be less crowded.
One of the major perks of growing older is getting discounts at movies, museums and restaurants. While some senior discounts are well-publicized and open to everyone old enough to have an AARP card, others are available only to those who ask. A little research can add up to big savings if you’re willing to admit your age.