Cuenca Expats Magazine, Issue 42

Many retirees, unfortunately, are ill-prepared to actually retire. In fact, about 37% of retirees in 2022 said that they didn’t have enough money to enjoy their golden years. This guide covers several ways to save for retirement and avoid becoming part of that 37%.

1. Take Advantage of Employer Match Plans

Many employer retirement plans offer matching contributions. What it means is that for every dollar you save in your plan, your employer partially or fully matches your contribution. Although most of these matching plans are capped at a certain amount, the caps are often quite high. A typical employer match amount is 3% of an employee’s salary, but is often as high as 6%, which can work out to thousands per year in “free money.”

2. Make Use of Catch-Up Consultations

One of the reasons why it’s important to start saving early if you can is that yearly contributions to IRAs and 401(k) plans are limited. The good news? As of the calendar year that you reach age 50, you’re eligible to go beyond the normal limits with catch-up contributions to IRAs and 401(k)s.

3. Automate Your Savings Plans

Thanks to modern technology, many banks and financial institutions have APIs set up that allow you to automatically set up payments to your retirement fund. The benefit here is that you can set the automation to pull money from your bank on a certain day of the month.

4. Delay Social Security Savings

Another tactic for putting more money aside for retirement is to delay your Social Security benefits. Starting at age 62, you can receive reduced Social Security benefits. However, each

year you wait to take your benefits, up until age 70, you earn what are called “delayed retirement credits” of 8% per year. These can obviously increase your Social Security benefit significantly.

5. Take Advantage of Double Contributions

Another big way you can save for retirement is by contributing more than once to your retirement plan. Although many people aren’t aware of this, some teachers, public sector workers, healthcare employees, and employees at nonprofits are able to add double the amount of cash to their retirement plans

6. Apply for Uncle Sam’s Retirement Savings Credit

Lower-income earners can also take advantage of savings credits to help them save for retirement. For instance, Uncle Sam’s Retirement Savings Credit offers a tax credit of up to 50% of your retirement plan contribution.

7. Consider Where You’ll Retire

Many individuals don’t realize that the location in which they choose to retire can have big implications for their nest egg. A few states actually have no state income taxes, meaning that you won’t have to pay those taxes on your income during retirement.

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