How to play catch-up with your retirement savings
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.
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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.