The average retirement age is 62, according to a recent Mass Mutual survey. It can feel a long way off for workers just beginning their careers. For those in their 50s, it can feel uncomfortably near if they're lacking savings, with some fearing they'll never be able to quit the workforce.
But no matter your age, there are steps you can take to move up your retirement date if that's something you're interested in. Here are three options to get you started.
Image source: Getty Images.
1. Claim your 401(k) match every year
Those eligible for a 401(k) match should make claiming it annually their top priority after paying their bills. It might only be worth a few hundred dollars today, but it could grow to be worth tens of thousands of dollars by retirement -- enough to cover a few years' worth of living expenses. It's really this future value you're giving up when you don't claim your match.
Obviously, it's not a choice for everyone. Some people genuinely cannot afford to give up any of their paychecks. But if you can claim even a partial match, that's better than nothing.
Talk with your 401(k) plan administrator or your HR department to learn how your company's matching formula works. Generally, you either receive a dollar-for-dollar match or a $0.50-on-the-dollar match up to a certain percentage of your income. Once you know how much you must save on your own, subtract any amount you've already contributed to your 401(k) in 2024 and divide the remainder by the number of pay periods left in the year so you know how much to set aside going forward.
2. Make catch-up contributions if you're eligible
Catch-up contributions are additional retirement account contributions adults 50 and older are allowed to make. You only have to be 50 by the end of the year to qualify. You don't have to wait until your birthday passes to exceed the standard annual contribution limit for your retirement account.
In 2024, catch-up contributions enable you to set aside an additional $6,500 to your 401(k) and $1,000 to your IRA, bringing your total contribution limits to $30,500 and $8,000, respectively. These limits will likely increase in future years.
You don't have to do anything special to make catch-up contributions. Just continue setting aside funds as you normally would. Be careful not to exceed your annual contribution limit, though, or you could incur costly tax penalties.
3. Increase your contributions by 1% of your salary per year
When you're not able to save as much as you'd like for retirement right now, it's best to start with whatever you can afford to set aside rather than waiting until you can make larger monthly contributions. Even small amounts can grow substantially after being invested for years.
Instead of trying to make radical changes to your budget, consider increasing your retirement account contributions by 1% of your income annually. That's just $50 more per month for someone earning $60,000 per year. A $50 monthly contribution might not seem like much, but that could turn into more than $9,000 in 10 years with an 8% average annual return. After 20 years, you'd have more than $28,000.
The above strategies aren't going to help you retire overnight, but if you apply one or more of them consistently, you should be able to retire a little earlier than you originally planned. Just be sure to balance your retirement savings goals against your present financial needs. Slow and steady is a better approach.
