Preparing for retirement often takes decades, and the more time you have to save, the better. But that doesn't mean you should stop saving once you start approaching retirement age.
It's crucial not to let your guard down as you get closer to retirement. Even if you only have a few years left to save, making these retirement moves can help you head into your senior years as prepared as possible.
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1. Take advantage of catch-up contributions
Once you turn 50 years old, you're eligible to make catch-up contributions to your 401(k) or IRA.Generally, you're allowed to contribute up to $19,500 per year to your 401(k) and $6,000 per year to your IRA. If you're 50 or older, however, you are able to contribute an additional $6,500 per year to your 401(k) and an extra $1,000 per year to your IRA.
Catch-up contributions can help you supercharge your savings in the years leading up to retirement. Although not everyone can afford to max out their retirement accounts, if you do have some extra cash to put toward your savings, every little bit counts.
2. Max out your employer match
One of the biggest advantages of saving in a 401(k) is having access to employer matching contributions. If your plan offers an employer match, maxing out these contributions can give your savings a serious boost.
The average 401(k) match is around 3.5% of an employee's wages, according to the Bureau of Labor Statistics. If you're earning, say, $60,000 per year, that's $2,100 per year in matching contributions. Let's also say your investments are earning a 6% annual rate of return. At that rate, that $2,100 per year can amount to nearly $28,000 after 10 years.
Employer matching contributions are essentially free money, so if you're not saving enough to earn the full match, you're leaving money on the table.
3. Estimate your Social Security benefit amount
Approximately 90% of seniors are entitled to Social Security benefits, according to the Social Security Administration.
Depending on how much you have saved, your monthly checks could make up a substantial portion of your retirement income. By estimating how much you can expect to receive each month in benefits, it will be easier to figure out how much of your retirement income will need to come from your savings.
Fortunately, it only takes a few minutes to check your future benefit amount. By creating a mySocialSecurity account online, you can review your Social Security statements and see your estimated future benefit amount -- which is based on your real earnings throughout your career. If you discover that you won't be receiving as much as you expected, now is the time to supercharge your savings before you retire.
It's never too late to save for retirement, so it's important to keep preparing even as you near the finish line. By making these last-minute retirement moves, you can give your savings one final boost before you head into your senior years.
