LANSING, Mich. (WLNS) – In this week’s Money Monday, we’re looking at a few easy ways to build up your retirement savings.
Research shows that before the pandemic, about 85% of Americans had some form of savings for retirement.
But due to financial strains this past year, one survey found 27% of people stopped saving, or saved less.
You start small and you increase incrementally. If you work for a company, you can put just 1% of your pay into the retirement plan. This may actually work out to around $20 or $25 per pay period, but you start there.
If you don’t work for a big company and don’t have a retirement plan, you can start an IRA. You can go up to $6,000 in an IRA, $7,000, if you’re over 50. But again, you can start small.
Most of the investment companies out there allow you to use small dollars to fund these plans, do something, start small.
The path of least resistance is, if your company or organization offers some sort of retirement where they can pull money directly from your paycheck, that’s the easiest way to go. We know that people save more for retirement when they work for those organizations that allow you to pull automatically.
Again, a lot of companies don’t actually offer these plans. You could use an IRA or a Roth IRA.
The big difference between these two plans is that when you get a tax benefit, if you use a regular traditional IRA that gives you a tax benefit today, you save your whole career.
When you’re age 59 and a half, you can access that money when you take it out later.
With the Roth version, you don’t get any tax benefit today, but later when you take the money out no taxes are due.