15 Ways to Catch Up on Retirement Savings in 2022

Retirement can seem a long way off when you're just joining the workforce, but we get there faster than we think. That's why it's important to prioritize retirement savings from a young age. But for some of us, that ship has already sailed, so we just have to do the best we can.

If you're a little behind on retirement savings, the following 15 tips can help you catch up in 2022.

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One of the simplest ways to boost your retirement savings is to cut back on discretionary spending. That means things like dining out or buying clothing you don't need. Look over your bank and credit card statements from the past several months to identify possible areas of overspending. Then, make an effort to reduce your spending on these items and divert these funds to your retirement account instead.

Paying off debt may seem unrelated to retirement savings, but when it comes to high-interest debt, the two are often intertwined. Credit card and payday loan debt often charge you more in interest during a year than you'll earn off of the best investments. As a result, you end up losing more money than you gain.

You'll do better if you make paying off your high-interest debt your top priority. A balance transfer card or a personal loan can help with this. Then, once you've gotten rid of that debt, you can begin putting even more money toward retirement savings every month.

Saving more for retirement can sound like a difficult task, but you don't always need to set aside hundreds of dollars more every month to make a difference. Even increasing your contributions by 1% of your annual income can make a huge difference over the long term.

If you earn $50,000 per year, that means contributing an extra $500 per year, or about $42 per month. Over 40 years, an extra $42 per month could net you an extra $104,000, if you earned a 7% average annual rate of return.

ALSO READ: Here's How Saving an Extra $1,000 Per Year Can Do Wonders for Your Retirement

Many Americans can look forward to a tax refund after they've filed their 2021 tax return. While it might be tempting to spend this, consider stashing it in an IRA instead. If you don't have one of these, think about opening one now so you can immediately deposit the refund when you receive it.

Anyone who qualifies for a 401(k) match should make claiming it their top priority unless doing so would leave them unable to pay for their essential bills. Your 401(k) match is money your employer gives you for your retirement, but you only get it if you set aside some of your paycheck first.

If you're unsure how your company's matching formula works or whether you qualify for a match, check with your company's HR department first.

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Maxing out your retirement accounts isn't easy, but if you're able to do so, it's one of the fastest ways to shore up your retirement savings. You're allowed to contribute up to $20,500 to a 401(k) in 2022 and $6,000 to an IRA. But these limits vary from year to year. If you plan to max out your accounts regularly, you need to keep up to date on these changing limits.

ALSO READ: Why Maxing Out Your 401(k) Can Be Overrated

Adults 50 and older are permitted to make catch-up contributions to their retirement accounts. This means they can contribute an extra $6,500 to their 401(k) and an extra $1,000 to their IRA in 2022, bringing their contribution limits to $27,000 and $7,000, respectively.

You can make these catch-up contributions as long as you'll turn 50 in 2022. You don't have to wait until your birthday to surpass the standard contribution limits for adults under 50.

If you cannot afford to set aside more money for retirement, consider asking your employer for a raise. Be ready to highlight why you think you deserve one, and have specific examples of how you've helped the company recently. Your boss doesn't have to pay you more, but there's no harm in asking.

Workers have been quitting their jobs left and right over the past few months, which means there are plenty of employers looking to hire new talent. If you're not able to get a raise at your current job, you might consider looking elsewhere to see what you can find.

Update your resume and look into which companies are hiring in your field. Don't feel you have to limit yourself to jobs in your immediate area, either. Many employers are now allowing their teams to work remotely, so this may be an option for you.

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Starting a side hustle can help your retirement savings in several ways. First, it can provide you with a source of additional income you can put toward retirement savings. And if you stash all you make into a tax-deferred retirement account, you won't have to worry about paying estimated taxes.

If you have a side hustle, you can also contribute to a self-employed retirement account. These have much higher contribution limits than traditional retirement accounts, but you're not allowed to exceed 25% of your net self-employment income.

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Health savings accounts (HSAs) are intended to hold money for medical expenses, but they make great retirement accounts, too. HSA contributions reduce your taxable income for the year, and if you spend the money on medical expenses, it's tax free. You can also make nonmedical withdrawals, though you'll owe taxes on these, plus a 20% penalty if you're under 65.

You're allowed to contribute up to $3,650 to an HSA in 2022 if you have an individual health insurance plan with a deductible of $1,400 or more. Families with a health insurance plan with a deductible of $2,800 or more may contribute up to $7,300 to an HSA in 2022. Just make sure you choose one that enables you to invest your funds, just as you would with a retirement account.

Automating your retirement savings frees you from having to remember to make contributions on your own. If you have a 401(k), you're most likely doing this already. You decide how much you'd like to set aside, and it comes right out of your paycheck every pay period.

With an IRA, you will likely have to link a bank account and decide how often you'd like to transfer funds. Make sure you do this when you know you'll have enough money in your account. Shortly after you get paid is usually a good idea.

Investing in more conservative assets like bonds might feel safer than risking your money in the stock market, but being too conservative can be nearly as dangerous as taking huge risks. If you place too much of your money in bonds, it won't grow as quickly and you'll need to set aside more money each month to reach your savings goal.

If you're unsure how much you should have invested in stocks versus bonds, use the 110 minus your age rule. That says you should keep 110 minus your age in stocks. So if you're 40, you'd have 70% of your money invested in stocks and 30% in bonds.

ALSO READ: Should You Really Be Investing in the Stock Market in 2022?

Fees can eat into your profits and slow the growth of your savings as well. One of the most common fees you'll run into while investing for retirement is expense ratios. These are an annual fee you'll find with mutual funds and exchange-traded funds that's listed as a percentage of your assets. For example, a 1% expense ratio means that every year, you'll pay the fund manager 1% of the money you have invested in the fund. You should try to avoid investments that charge you more than this.

Index funds are a great choice for those who are trying to keep their costs low. They can have expense ratios as low as 0.03%, and they instantly diversify your money among dozens of top companies.

When all else fails, delaying retirement is an option. Pushing back your retirement date gives you additional time to save for your future and gives the money you've already set aside more time to grow before you have to begin drawing upon it. Plus, it shortens your retirement, so you'll need less money to cover your expenses.

It's not the ideal solution, but it's worth considering if you can't come up with another retirement plan that works for you.

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Hopefully, the tips above sparked a few ideas for you. Now's the time to put them into practice. Take the suggestions that make sense to you and try them out this year. Check in with yourself every few months to see how you're doing. And see if you can identify even more opportunities to boost your retirement savings.

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