Even if you have a retirement investment account that you regularly make contributions to, it’s important to consider additional ways to save up for the future. In addition to Social Security and an employer-matched 401(k), there are several things you can do to add to your retirement funds. From opening an IRA to investing in the stock market, here are four ways you can boost your retirement savings.
Importance of Diversifying Your Retirement Savings
Spreading out your savings is essentially placing your eggs in multiple baskets rather than just one. Diversifying your retirement savings is beneficial because it can minimize the risk of negative effects on your entire portfolio if something should happen to the funds in your investment accounts.
When you keep a large percentage of your retirement savings in a single type of investment asset, you can have a higher risk of losing that investment should something happen. This is why placing investments across multiple sources can be beneficial for protecting your retirement savings.
Opening an IRA
One way to boost your retirement savings if you haven’t already done so is to open an individual retirement account (IRA). There are two types of IRAs you can consider: a traditional IRA and a Roth IRA.
With a traditional IRA, your contributions are tax-deductible, which means you don’t have to pay taxes at the time you make your contributions. Instead, when you start withdrawing after retirement, you’ll pay a percentage in taxes then. On the other hand, a Roth IRA allows you to make contributions that are taxed, but when you retire and begin withdrawing from your IRA, you won’t be taxed.
Investing in the Stock Market
Investing in the stock market is another great way to diversify your retirement portfolio. You can look into options trading for long-term investments, mutual funds, or hedge funds. The benefits of trading in the stock market as a long-term retirement goal can help you boost your savings, especially when you apply trading strategies that help you liquidate your assets into the future.
If you decide to get into stock trading to boost your retirement savings, look into online platforms that offer resources and tools for stock trading for beginners.
Delaying Your Social Security Payments
Another way to boost your retirement funds is by delaying the payments you receive from your Social Security. This means that for each year that you can delay receiving Social Security benefits before you turn 70 years old, the more you will receive in the future. Even though you can start collecting your Social Security benefits at age 62, the longer you wait to collect, the higher your monthly Social Security benefits will be.
It’s also important that you start saving for your retirement as early as you can. For instance, even opening a separate, high-yield savings account can get you started. The sooner you start contributing to a retirement fund, the sooner you can start boosting your savings. Then, when you get to retirement age, you’ll have a healthy retirement portfolio to rely on.
Interesting related article: “What is a Pension?“