We're only a few months away from 2024, and I promise you're not the only one feeling a little discouraged by the number of unchecked items on your to-do list. A lot of people made plans at the start of the year -- perhaps a goal to save a certain amount for retirement in 2023 -- and then life got in the way, priorities changed, and they haven't found a way to get things back on track yet.
That's OK -- it happens. The good news is there's still time. If you still want to set aside some money for your retirement this year, try the following three tips.
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1. See if you can begin or increase contributions for the rest of the year
With holiday expenses coming up, it might feel like a tall order. However, if you can budget a little money for retirement savings in this last quarter, go for it. If you're saving in a workplace retirement plan, like a 401(k), you must make all your 2023 contributions by Dec. 31. You technically have until the tax deadline -- April 15, 2024 -- to make individual retirement account (IRA) contributions for this year. But it's usually much simpler if you can make these by the end of December as well.
Review your monthly budget and decide what you can afford to set aside each month or pay period until the end of the year. Then, automate your contributions so you don't have to think about them. You should be able to log into your online retirement account and either defer money from your paychecks or set up automatic transfers from a bank account, depending on the account you're using.
2. Claim your 401(k) match
Your 401(k) is the best home for your retirement savings if you haven't gotten your company match for the year. If your employer contributes $1 for every dollar you put into the account, you could effectively double how much you add to your savings this year without putting too much strain on your budget.
Keep in mind that there's a cap on how much employers will contribute to your 401(k), typically set as a percentage of your salary. Check with your company's HR department if you're unsure how your company's matching formula works.
Once you know how much you must contribute to get your full match, divide this amount by the number of pay periods left in the year to figure out how much you must set aside per paycheck to claim the whole thing. Aim for this number if you're able to do so. Otherwise, just claim what you can before the end of the year.
3. Save end-of-year bonuses
If you qualify for any end-of-year bonuses, consider setting this money aside for retirement rather than spending it. You can either defer it to your 401(k) or put the money in an IRA if you miss the Dec. 31 deadline for 401(k) contributions.
You could also stash any cash you get for the holidays from family and friends in your retirement account as well. But you'll need to use your IRA to do this as 401(k)s require you to defer money from your paychecks.
Be careful not to exceed your account's annual contribution limit for the year if your bonus is substantial. This probably isn't a concern if you're stashing it in your 401(k) since you can set aside up to $22,500 here in 2023 or $30,000 if you're 50 or older. But IRAs only enable you to save up to $6,500 in 2023 or $7,500 if you're 50 or older.
When all else fails, reevaluate your plans for 2024
Even with your best efforts, it might not be possible to save as much for retirement in 2023 as you'd hoped. That can be disappointing, but try to cut yourself some slack. Saving money for retirement isn't easy, and everyone has difficult years. Rather than getting too down on yourself, reevaluate your plans for 2024.
If possible, increase your 2024 contributions to make up for what you were unable to set aside in 2023. Or if that's a little too steep for you, go back to the drawing board: Use a retirement calculator to estimate how much you need to cover your future expenses and how much you must save per month to get there. This might be more feasible than trying to double your contributions next year.
