The following content originally appeared in an article by Ashley Eneriz on Investopedia.com on January 22, 2016.
5 Ways to Supercharge Your Retirement Savings
Getting close to retirement age? It is natural to feel slightly panicked at the prospect of not having enough savings for your retirement. Thankfully there is always enough time to boost your savings before you hit retirement age.
1. Cash Is Not King
Putting money into a savings account will not be as beneficial to you as investing. "There's absolutely no return on cash, so investing for the long-term is always key," says Lauren Klein, founder and president of Klein Financial Advisors in Newport Beach, CA. Figure out how you can contribute the maximum amount to your 401(k), and then max out an Roth IRA account. If you are over 50, you will be able to contribute even more money than you were able to when you were younger.
If you cannot max out these tax-free retirement accounts each year, then you need to adjust your lifestyle and budget to enable it. Cut spending and debt drastically to fully pad your retirement accounts. Adjusting your spending habits will not necessarily be comfortable or easy, but it is essential to make the sacrifices now to ensure security later. (Get more information here, Where Else Can I Save for Retirement After I Max out My Roth IRA?)
2. Don’t Dip Into Retirement Savings- No Matter What
When you are near retirement, your nest egg is probably quite impressive, depending on how many years you have been contributing to your 401(k) or Roth IRA. However, don’t let this figure tempt you into spending some of the money, especially on adult kids.
Klein advises keeping retirement savings intact, not allowing any funds to leak out. “I've seen too many well-funded portfolios dwindle because retirees open up the purse strings to help their adult kids—even when they can't afford to. Determine your budget, set your priorities, and take care of yourself before taking care of everyone else," says Klein.
Remember, helping your adult children now will hurt them later on. If your nest egg won’t cover your living and medical cost for the rest of your life, guess who will be stuck footing the bill – your adult children.