Retirement Savings: How to Boost Your Investments
Retirement can seem like tomorrow’s problem. But that kind of thinking will leave you working hard for your money—for the rest of your life. Properly saving for retirement now gets you on the path to golden years of glory.
You can boost your investments and make retirement savings the priority it deserves to be. Just follow these nine tips.
1. Start investing today.
By “today,” we mean once you’ve reached Baby Step 4. That means you’ve successfully walked through the first three steps and are now ready to begin saving for retirement.
Baby Step 1: Save $1,000 for your Starter Emergency Fund
Baby Step 2: Pay Off All Debt (Except the House) Using the Debt Snowball
Baby Step 3: Save 3–6 Months of Expenses in a Fully Funded Emergency Fund
Baby Step 4: Invest 15% of Your Household Income in Retirement
Notice those first three Baby Steps are all about avoiding and paying off debt. They propel you to a debt-free lifestyle so you can start thinking about the future while living in the security of the present.
The first $1,000 emergency fund keeps you going while you crush your debt. And that full fund you save up on Baby Step 3 means you always have cash ready—so you don't even think about running back to your borrowing ways. At that point, you’re in the right place to start investing by putting 15% of your household income into retirement savings.
Let’s dive into those details.
2. Learn your R:IQ.
When you think about retirement, you’ve probably set a specific age as the target. I want to retire when I’m (fill in the number). But in the words of our good friend Chris Hogan, a bestselling author, Ramsey personality, and financial expert: “Retirement isn’t an age. It’s a financial number.”
That financial number should be your target—your retirement savings goal that will get you living the retirement of your dreams.
So, how much money will make that happen? You need to find out your R:IQ or Retire Inspired Quotient. It’s easy. Chris Hogan’s crew crafted a retirement calculator that will show you exactly how much money to invest each month based on your age, income and retirement lifestyle goals.
3. Take advantage of your employer’s 401(k) and company match.
Here’s the simple breakdown of where your investing should start. First, look into your employer’s 401(k). If you have this and you’re able to, max out the amount of contributions you can put into this fund, which is $18,500 a year of your own money.
That $18,500 doesn’t include your company match. If your employer offers this, then use it with a grateful heart. A company match of any percentage is a great employee benefit to get you even closer to your retirement goals. Remember though, that match isn’t part of the 15% you’re investing. It’s just a lovely little bonus.
After you hit the $18,500 mark, you’ll call in reinforcements such as the Roth IRA, which allows up to $5,500 a year. If you need help working through all this, or you’re ready to invest beyond those two levels, you should talk to an investing pro.
4. Automate your investments.
Have all your investments automate right out of your check—so you never even see them. This tip helps you from being tempted by the immediate desires that money says it can fulfill.
If you’re always moving your retirement investments over manually, you might hear the gratification portion of your brain whisper that this cash would be better used on furnishing a home theater or going on an exotic getaway “just because.”
We aren’t saying you can’t save up for nice things in life. We are saying you shouldn’t shortchange your retirement savings to get those nice things. An auto-draft can remove that temptation altogether.
5. Budget for retirement.
Putting that 15% (or more, depending on your R:IQ) into retirement savings each month is simple when you make it a line item in your EveryDollar budget. That’s how you get intentional about investing.
Simply follow these steps:
Scroll to the bottom of your budget on the desktop version.
Click “ADD GROUP.”
Name it something like “Retirement Savings.”
Then click “Add Item.”
Label your investments.
6. Put raises toward retirement.
When you get a raise at work, first of all—congratulations! We’re throwing confetti in celebration. You can’t see it. But it’s here.
Second of all, point that extra money directly toward boosting your retirement savings. Do not pass go. Do not collect $200. Invest it. You aren’t used to living with it, so you won’t even notice it’s gone.
7. Rein in your spending.
It’s time to get real. With yourself. Review your money habits to see where you can rein in your spending. That gum-buying routine, drive-thru coffee habit, or comical T-shirt obsession could be costing you some serious money that would be way better used toward investing in retirement.
Be honest with yourself about places you overspend or budget lines that could be easily lowered. Here’s one simple solution as an example: Meal planning can save you around $200 a month. That would give an awesome jolt to your retirement savings right there—without a huge sacrifice other than some time being intentional with your grocery planning and shopping.
8. Ditch your credit cards.
The best way to get ahead? Stop getting behind. Now apply that to your money. Using credit cards gets you behind in your finances. All it grows is your debt and your pile of stuff (and that stuff isn’t even really yours). What you want to grow is retirement savings—not debt and junk.
Credit card companies may sign you with a low interest rate, but you better believe they’ll bump it up. Check out these staggering stats. Average interest rates are at 17.14%.1 And Americans are carrying a collective credit card balance of $848 billion.2
Some quick math (aka asking your smart phone) shows that these companies stand to profit $145 billion in 2019, in interest payments alone! No, thank you. Instead of sending all that money to credit card companies this year, let’s invest it in our futures.
9. Get an investing pro!
Listen, all these details can be confusing for anyone. We suggest you find a reputable investment pro to help you out along the way. These people enjoy investment lingo—but they also know how to break down that lingo for you in a way you can understand. They’ll listen to your preferences and help guide you on your investment journey as you save for the retirement of your dreams.
And those retirement dreams can come true—if you follow the right steps and put your grit to the grindstone. You’ve got the steps, so start moving.