3 Ways That May Improve Retirement Savings without Investing More Money

If you are short on cash right now, keep reading for 3 ways that may improve retirement savings without investing more money. 

#1 Invest in Yourself

improve retirement savings without investing more money

One of the best things you can do that may improve retirement savings without investing more money is to invest in yourself. 

Financial ignorance is costly. So do what you can today to educate yourself and grow your skills. 

If you’re investing in your 401(k) or any other retirement savings accounts and you’re not clear on what you’re getting, it’s time to become engaged with your investments. 

All too often, when 401(k) or IRA statements come in the mail each month, people toss them in the trash. 

Others try, but don’t understand what they’re reading. 

It’s important you become engaged with where you’re putting your hard-earned money. 

Open your statements and read them. Doing so helps you determine whether or not you’re on track to meet your financial goals and may have a big impact on your overall returns.

If you have a 401(k) with your company, you may be wondering if you should take out a loan or withdraw from your retirement savings to get by right now.

This is the perfect time to educate yourself on what options are available to you and really understand the downside of taking money from your 401(k). 

The more informed you are about rebalancing your 401(k) and target date funds, the better decisions you can make for your financial future. 

If you aren’t sure where to start, here are a few ways to educate yourself… 

improve retirement savings without investing more money

#2 Be Careful of Lifestyle Creep

improve retirement savings without investing more money

If you want to improve retirement savings without investing more money, avoid lifestyle creep. 

Lifestyle creep happens when you get a raise or new job that pays more and your spending increases with it. 

Investopedia states it best, “A hallmark of lifestyle creep is a change in thinking and behavior that sees spending on nonessential items as a right rather than a choice. This can be seen in the spending decision attitude of ‘you deserve it.’¹ 

In other words, a “want” becomes a “need.”

When you get a raise or new job, it’s easy to want to spend more…buy that new house, upgrade your car, or purchase a new soundsystem. 

And before you know it, you’re up to your eyeballs in expenses, and there’s little room left for retirement saving and investing. 

Lifestyle creep often starts with purchasing small things, such as buying every new tech gadget that hits the market that you don’t really need or dining at (or ordering from) more expensive restaurants. 

However, these purchases can quickly snowball into more expensive ones, and before you know it, you’re living paycheck to paycheck.

Willis Towers Watson’s Global Benefits Attitudes Survey published in February 2020 reported that, of those surveyed, 38% of employees live paycheck to paycheck. 

And 18% of employees making more than $100,000 per year live paycheck to paycheck.²

In addition, 39% of employees could not come up with $3,000 if an unexpected need arose within the next month.³

Keep in mind this survey was published weeks before the lockdown in late March. 

improve retirement savings without investing more money

The culture of consumerism has caused crippling debt among consumers, and it’s hindering our ability to save for retirement and invest in our future. 

It doesn’t matter how much money you make–whether you’re a $50,000 or $200,000 income household. 

Overspending and lack of savings plague all income brackets. 

When emergencies arise or the economy takes a dive and you’re spending beyond your means, the first area to often suffer is savings. 

No matter your household income, quality of job, or current financial situation, it’s time to take control of your financial future. 

Here are a few ways to do this: 

  • Before you make a purchase, ask yourself, “Am I buying this because I need it or because I want it?” If it’s a want, reconsider the purchase.  
  • What if you didn’t buy that new phone/computer/tech gadget this year and, instead, stashed more in your retirement savings? How much would that be? Add it up.  
  • If you’re frequently late on paying bills, how much could you save in overdraft or late fees each month if you managed your money more closely? Take a look at the past 6 months of fees, and add them up. That’s how much you could save in the next 6 months if you budgeted better. 

Do the exercises above, and you’ll realize little things add up in a big way. 

If you recognize lifestyle creep in your life, do what you can to get a handle on it as soon as possible. So the next time you get a raise or new job, you’ll be in a better position to save more for retirement

When it happens, simply direct half of your raise to your future. Then, take the other half and enjoy an improved lifestyle. 

#3 Get Professional Help 

improve retirement savings without investing more money

If you’re hesitant to reach out for advice because you think your retirement account balance is too small and you need more money saved, don’t let that stop you from getting help!

This is your future we’re talking about. 

The sooner you seek expert advice, the higher the probability you’ll be better off financially in the years to come…and in retirement.

Studies show seeking help may improve retirement savings without investing more money.

In a 2019 study titled Advisor’s Alpha, The Vanguard Fund Group, Inc., reported a 3% average increase in the value of portfolios of clients who work with a good financial advisor.⁴  

This return, the study states, depends on the client’s situation and will vary from year to year. 

David Blanchett, Head of Retirement, CFP, CFA of Morningstar reported that participants that received expert guidance had as much as 40% more income during retirement versus those who received no Help at all.⁵

Just think for a moment how 40% more income at retirement might change your lifestyle later in life. 

Chances are, it would make a significant difference. 

It doesn’t matter how much or how little money you have saved for retirement, or how much debt you have…

A third-party expert may help you create a plan to maximize your retirement savings and may help you improve retirement savings without investing more money. 

The sooner you reach out for help, the better off you may be. 

If you have questions about your 401(k) or if you need help, we’re here for you. Click below to book a complimentary 15-minute call with one of our advisors. 

Book a Call

Sources: 

  1. https://www.investopedia.com/terms/l/lifestyle-creep.asp
  2. https://www.globenewswire.com/news-release/2020/02/11/1983140/0/en/Despite-improvement-in-their-financial-wellbeing-U-S-workers-remain-worried.html
  3. https://www.globenewswire.com/news-release/2020/02/11/1983140/0/en/Despite-improvement-in-their-financial-wellbeing-U-S-workers-remain-worried.html
  4. https://www.investopedia.com/articles/personal-finance/102616/how-much-can-advisor-help-your-returns-how-about-3-worth.asp
  5. David Blanchet, Head of Retirement, CFP, CFA, Morningstar 2014, “The Impact of Expert Guidance on Participant Savings and Investment Behaviors”

 

0 0 vote
Article Rating

401(k) Maneuver™ is offered by Royal Fund Management, LLC, which is registered as an investment adviser with the SEC and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability.Royal Fund Management, LLC, is not affiliated with or endorsed by NASDAQ.

All investment strategies have the potential for profit or loss. Changes in investment strategies, contributions or withdrawals, and economic conditions may materially alter the performance of your portfolio. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client's investment portfolio. There are no assurances that a client’s portfolio will match or outperform any particular benchmark. Asset allocation and diversification do not ensure or guarantee better performance and cannot eliminate the risk of investment losses. Projections are based on assumptions that may not come to pass.

Images and photographs are included for the sole purpose of visually enhancing the website. None of them are photographs of current or former clients. They should not be construed as an endorsement or testimonial from any of the persons in the photograph.

0
Would love your thoughts, please comment.x
()
x

Have questions? Need help?

Book Your Complimentary

15-Minute Consultation
with an Adviser


logo

Looking for tips that might maximize your retirement
savings and help you be a better steward of your money?

Subscribe to our 401(k) Blog

The go-to-source for your retirement investing and saving tips

401(k) Masterclass Video

Learn 3 Strategies That May SUPERCHARGE Your
401(k) Performance

13 minutes may change the direction of your retirement future

How Popular Advice On Target Date Funds May Be
Working To Undermine Your 401(k) Retirement Savings

Download Your Copy Today

*Your privacy is important to us. We do not rent, sell or share your information.