How to play catch-up with your retirement savings

The Street

Liz Miller, Founder & President of Summit Place Financial Advisors, joins TheStreet to share some tips about what to do if you’re behind on saving for retirement.

Transcript

00:00What's the best way to play catch-up, right?

00:04If it's the mid-year financial check-up

00:08and you realize that you're not where you want to be

00:12in terms of saving for retirement,

00:15now here we are, middle of the year,

00:17what's the best way to play catch-up?

00:21There's a lot of ways to get there, right?

00:24First of all, I would say there's a lot of great,

00:27we call them calculators, online, right?

00:29Take a look online, see what it shows you.

00:32We kind of like to say, depending on your age,

00:35think about trying to accumulate about 10 times

00:38your income currently to be ready for retirement.

00:41So that's just a rule of thumb to get started.

00:44So if you find you're behind the eight ball,

00:46the easy answer is, I guess I have to save more.

00:49But how do we do that?

00:50If you've got a 401k plan or a 403b at work,

00:55a lot of times we find people are only contributing

00:58up to a match and they'll tell you,

01:00oh, I'm at the maximum, I get the full match.

01:02And we say, no, no, no, no.

01:05So let's go beyond the match.

01:06So the first thing is that is always

01:08one of the best ways to save at work.

01:10It comes right off your paycheck

01:12and those are usually great programs.

01:14So if you can, try upping for the second half of the year

01:18how much you're taking out for your 401k.

01:22You can usually adjust those a lot.

01:24I work with a lot of young people in their 20s

01:26where when I have a discussion with them,

01:29they don't even really know what they can live on.

01:31So we say, well, let's move it until you feel a little pain,

01:34you let me know, and then we'll pull it back.

01:37So we kind of keep pushing more and more of their paycheck

01:40to be immediately taken into that retirement plan.

01:43Another way to do it, particularly if you don't have

01:46a retirement plan at work, is to, again,

01:49take it right off the top.

01:51Set up a transfer from your checking account

01:53where your paycheck comes right into a Roth IRA.

01:58Open a Roth IRA at a Vanguard or a Schwab,

02:01they make it really easy,

02:02and then you link your checking account

02:04and you set up an automatic deposit

02:07every time your paycheck comes in

02:09so that it doesn't end up in that spending bucket.

02:12You take it right off the top.

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