If you are over 50 and haven’t started saving for retirement, you most likely already know that you need to save more.
Running a retirement calculation that estimates that you’ll work until you’re 80 could be counterproductive. You might just throw your hands up and say, “Why bother?!”
You’ll want to map out a savings strategy (ideally with a financial planner), but your very first step doesn’t need to be using a retirement calculator. You know you are behind. Instead, make your step one more productive.
Figure out a way to make more money. That’s a sure way to jumpstart your retirement savings.
First, think about ways to increase your income with your current employer. In other words, start right where you are standing.
Here are five things to ask yourself to make more money at your current job:
How can I get a raise?
I used to work for a company that didn’t give annual raises. Quarterly bonuses were based on achievement, and an annual bonus was paid on performance and profitability, but the base salary didn’t increase.
For example, if your base salary was $80,000, five years later it would still be … $80,000. Exactly the same.
Contrast this with a company that rewards employees with both raises and bonuses. If you earned a 3% raise each year for five years at a base salary of $80,000, in five years, you’d be earning over $92,000. If you were able to secure a 4% raise each year, you’d have a base salary of over $97,000. Any bonus money would just be a sweet addition!
If you don’t see a future at your current employer, even a lateral move to a company with a history of paying salary increases and where employees hit their bonuses consistently could pay off in a short period of time.
How can I get better benefits?
Your salary is only part of your total compensation. At many companies, benefit packages can make up 30% of your pay. When your salary compounds, some of your benefits will, too.
For example, say your employer offers profit-sharing contributions to your retirement plan at 3% of your salary. On a $100,000 income, that’s a $3,000 contribution. If you received a 4% raise every year for five years, your salary would be over $121,000, and the company’s 3% profit-share contribution would increase to about $3,650.
Incremental increases in salary and benefits are significant.
Can I earn a bonus?
If your company sets goals that allow you to earn an annual bonus, focus your time and energy on hitting them. If you do, resist the urge to increase your lifestyle spending, spend on a big-ticket item or take an extravagant trip.
Instead, budget for vacations and living expenses from your regular paycheck and invest the bonus money for retirement.
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Here are 5 Easy Retirement Money Moves to make right away, even if you haven't saved a penny.