7 secrets of retirement you’re forgetting

It’s not news to anyone even half-awake that Americans aren’t saving enough for retirement. You can’t go a week without reading another report that retirement savings are down and household debt is up.

It’s also hard to avoid the same old advice: spend less, save more, and pay off debt. But according to the non-partisan U.S. Government Accountability Office(GAO), “about half of households age 55 and older have no retirement savings (such as in a 401(k) plan or an IRA).”

Clearly, the standard advice isn’t working. What’s the alternative for successful retirement savings? Here are seven retirement savings suggestions you may not know.

Start today

Whether you have no retirement savings or little retirement savings, start today to make retirement savings a priority.

Opening a company-sponsored retirement account with your employer and opening a Traditional or Roth Individual Retirement Account (IRA) online both only take a little effort. It may seem daunting, but it has never been easier. Of course, those retirement plans aren’t your only options.

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The best way to highlight this is an example. The maximum IRA contribution limit for 2017 for those under age 50 is $5,500. See the results of a conservative 7% annual return on one year’s worth of maxed out IRA contributions based on the number of years until retirement:

Years until retirement Return including principle
10 $10,819
20 $$21,283
30 $$41,867
40 $$82,360

Therefore, if a new worker, just out of college with about 40 years until they reach the traditional retirement age of 65, maxes out their IRA contributions their first year and makes no other contribution for as long as they work, they’ll have $82,360 saved for retirement at age 65. On the other hand, if a worker who has ten years until they retire only maxes out their IRA contributions this year, they’ll have $10,819. To be sure, $10,819 is better than nothing, but these examples show the value of time in the market.

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