Tips for Increasing Your Retirement Savings

Having a comfortable nest egg to fall back on when you retire is everyone’s goal.

But are you doing everything you can to set yourself up for success when you retire? At First Community Bank, we have gathered several tips to help increase your savings and plan for a happy retirement in WV, VA, NC, TN, or wherever life takes you.

Start Saving Early

It is never too early (or too late) to start saving, but the sooner you begin, the more financially comfortable your retirement will be. When you start to set money aside earlier, let’s say in your mid-twenties, you could potentially end up saving more than if you were to start in your mid-thirties. This is because of the concept of compound interest. Investing a small amount each month over a longer period can have a bigger impact on your savings than a large dollar amount over a shorter period of time.

Choosing the Right Retirement Plan

Start contributing to a 401(k) plan

• Typically, employers can offer a traditional 401(k) plan to eligible employees. This type of plan allows you to contribute money to a savings account on a pre-tax basis and is matched by your employer. Since this money will be automatically withdrawn from your paycheck, you won’t even notice it gone, and your spending budget won’t be affected!
• If your employer offers a company match (some typically match around 3-5%), then take them up on that offer. If not, you are leaving free money up for grabs.

Open an IRA account

• If a 401(k) isn’t an option, an Individual Retirement Account (IRA) can help you save for retirement as well. There are 2 types of IRAs: a Traditional IRA and a Roth IRA. Depending on your income, one of these plans may work better for you than another.
• When you contribute to a Traditional IRA, your savings may be tax-deductible, and the earnings on your investment have the opportunity to grow tax-deferred until you remove the money from the account. If you choose a Roth IRA, it may be based on your federal tax filing status. Roth IRAs are funded after-tax, so once you reach age 59½, your earnings are not subject to federal taxes (and potentially state-tax-free) if certain holding period requirements are met. To find out which retirement plan is right for you, use our Retirement Plan Calculator and discuss retirement options with a financial advisor at First Community Bank.

Basic Money Saving Habits

It may seem like common sense, but practicing basic money-saving habits can go a long way towards a happy retirement. Here are a few tips from First Community Bank:

• Record your expenses. Know exactly where your money is coming in from and where it is going out to. The more familiar you are with your accounts, the better saving habits you will develop. At First Community Bank, we offer our customers wealth management and trust services, so that you can have a strong strategy that helps you reach your near and long-term goals.
• Prioritize your savings, with retirement towards the top of the list. Focus on higher-interest debt payoffs first, build a healthy emergency fund, and try to be prepared for anything and everything. Determine savings you may need with our Savings Goal Calculator.
• Use an automatic savings program that deducts funds without you even realizing. By automating your savings, you will be setting aside money without even realizing it! 

Delay Social Security Benefits

Did you know that delaying your social security benefits as long as possible could lead to major benefits? The current age for retirement is 66, or 67 for those born after 1960. However, by putting off collecting your retirement fund by a few years, your benefits could increase by a decent percentage. Individuals who remove their saved retirement fund at age 62 can face a permanent reduction in benefits. This reduction can continue to drop each year until the individual’s full retirement age. 

The bottom line is this: when to take hold of your social security benefits can be complicated. Knowing how much you should set aside in a 401(k) is complicated. But knowing that you’re working towards the goal of a happy, comfortable retirement doesn’t have to be complicated. Take the time to decide while considering outside factors such as life expectancy and expenses, and trust that your savings are there to support you. 

Want to know more? Contact First Community Bank or visit a branch to start exploring the retirement plan option that will best suit your lifestyle and goals.