A study from 2018 revealed that 68% of Americans started saving for retirement after the age of 25. While early savings can be instrumental in accumulating wealth, a solid savings strategy can boost anyone’s nest egg no matter what age they start saving.
There are a number of approaches you can advise your clients on while helping them boost their retirement funds.
Strategies you can give your clients to save for retirement
Automate savings
If saving takes too much time or energy, people are less likely to do it or contribute as much as planned. Instead of making it a choice every month, advise your clients to have funds automatically transferred to an IRA or other investment. Most banks have automation plans, allowing customers to allocate their assets to specific funds.
Put raises and bonuses toward savings
A great way to boost retirement contributions is to designate annual raises or bonuses toward an emergency fund or investments. Advise your clients to maintain their current lifestyle rather than opting to spend more with every increase in income. Over several years that money can really add up and help prepare for future financial demands.
Contribute regularly to an employer 401(k)
Automatically deducting money out of every paycheck to an employer 401(k) allows your client to contribute pre-tax money to savings and also decrease their tax burden at the end of the year. Even more importantly, encourage your clients to at least put in the amount of money their employer matches, otherwise they are just giving away free money!
Control spending
Creating a budget and evaluating where each dollar goes is one of the best strategies your clients can utilize to cut spending and save more money. Revolving payments can really eat at savings goals. These are some things you can recommend your clients cut out (even just partially) to improve their monthly surplus:
- Subscriptions
- Expensive gym memberships
- Restaurant meals and fast food
- Coffee shop trips
- Entertainment
Cutting excess spending is a helpful way to get a jumpstart on increased savings. Even just a couple hundred dollars extra per month can yield significant results over time. Following a budget is a dependable way to stay on track and meet outlined goals.
Pay down debt
Perhaps one of the most substantial ways people can save more for retirement is to reduce debt, which is most commonly held up in:
- Mortgages
- Auto loans
- Credit cards
- Student loans
- Educational loans for children
- Home equity loans
Freeing up money by paying off debt is one of the best ways to build wealth quickly. You can help your clients come up with a plan on how to reduce their personal debt and start contributing more to their savings plans for retirement.
Take advantage of catch up contributions
If you are age 50 or older, you are eligible to make “catch up” contributions to your IRAs and 401(k)s above and beyond the normal limit. As of 2020, individuals age 50 or older can contribute up to an extra $1,000 to their IRAs and $6,500 to their 401(k)s.
As an insurance agent, you specialize in finance and risk management, making you the perfect advisor for clients looking to save more for retirement. By using these strategies, you can make specialized recommendations for any client needing advice on saving funds.
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