You contribute to your retirement accounts diligently, but it seems like your balance barely budges. Sound familiar? You're not alone. But fortunately, you're not out of luck either.
There can be many causes for a stagnant retirement balance, but here are three of the most common and what you can do to solve them.
1. You're not contributing that much
The money that's already in your retirement account should continue to grow if you've chosen wise investments. But if you really want to speed your path to a fortune, you need to make regular, monthly contributions to your retirement account. Ideally, you'd aim to contribute as much as you ought to based on your estimated retirement costs.
But saving as much as you'd like for retirement isn't always easy. Sometimes you can make it happen by reworking your budget. Look for areas of overspending or subscriptions you forgot about and then cut them out. Funnel that money toward retirement savings instead.
Other times, you have to get more creative. You might consider starting a side hustle or seeking out new employment elsewhere. You could also try asking for a raise at your current job. Highlight what makes you a valuable employee and leverage other job offers if you have them.
Consider putting one-time windfalls into your retirement savings as well. If you expect a tax refund or a year-end bonus, throw that money in an IRA where it can earn some interest for you.
2. You're investing too conservatively
Conservative investing can reduce your risk of loss, but it can also slow down your gains. This forces you to save even more money going forward to retire with a large enough nest egg for all your expenses. The risk of loss inherent in investing can be scary, but there are better ways to handle it than sticking to "safe" investments, like bonds.
First, make sure you're diversifying your money. You should make sure you're investing in at least 25 different stocks in a few different sectors. Or if you don't feel comfortable picking stocks, choose an index fund instead. This instantly gives you an ownership stake in hundreds of companies, and index fund returns tend to be strong over time.
If you're concerned about investing too much of your money in stocks, follow the 110-minus-your-age rule. This says that you should keep 110 minus your age invested in stocks as a percentage. So a 50-year-old would keep 60% of their savings in stocks and invest the remainder in bonds and other safer investments. Over time, you move your money into more conservative investments to protect what you have, but you do this very slowly so you can still take advantage of the high earning potential stocks offer.
3. You're paying too much in fees
Fees can often go unnoticed, especially by beginning investors, because they come directly out of your retirement account. But you should make a point of learning what you're paying in fees because this can affect how quickly your money grows.
Some accounts, like 401(k) plans, have administrative fees that you can't do much about. But you do have some control over what you pay in investment fees. Mutual funds and exchange-traded funds (ETFs), for example, have expense ratios. This is the percentage of your assets invested in the fund that you must pay to the fund manager annually. So if you have $100 invested in the fund and it has a 1% expense ratio, you'll pay $1 per year.
You want to avoid expense ratios over 1% whenever possible. Sticking to index funds, discussed above, is a great way to keep your costs down. They tend to have low expense ratios -- in some cases as low as 0.03%. This helps you hold on to more of your earnings each year.
If all else fails, sometimes you just have to be patient. This is especially true if you're young. Your investments might seem to grow slowly at first, but over time, they will begin to grow more quickly as you begin earning more interest on top of your interest from previous years.