Did you know that by age 50, you should have about four times your yearly salary in your Thrift Savings Plan (TSP)? If it looks like you’re on track to hit this benchmark, congratulations! If it looks like you won’t hit the magic number by age 50, here are a few tips to help you sock away more money for your retirement.
Reduce Your Monthly Spending
Take a hard look at your banking statement to find monthly expenses you can live without. Look for free trials and auto-renewals for streaming services you no longer watch. Check accounts you have with app stores like Apple Pay or Google Play to find and cancel any subscriptions you’ve purchased through them. To help lower spending, look for better deals on cell phone plans and other services. Also, consider switching to a bank that offers cash bonuses for new customers to save even more.
Take Your Retirement Budget On A Test Run
Developing a retirement budget while you’re still working helps you see the big financial picture for your golden years. First, do the math to get an estimate of your monthly retirement income. Then start adjusting your spending habits to live within your “new normal.” The money you save can help build up your nest egg. If it looks like there’s no way you can live on your retirement income now, it’s not going to be any easier when you actually retire.
“Some experts advise saving at least half of any windfall, pay raise, or bonus for your retirement.”
Automate Your Savings
Now that you’ve cut back on spending and disciplined yourself to live on your retirement budget, automate your savings to avoid the temptation of dipping into your extra cash. It’s also important to put money aside in an emergency fund. Emergency savings can prevent you from withdrawing from your TSP or, worse, using a high-interest credit card to cover an unexpected expense.
Save Unexpected Windfalls & Pay Raises For Retirement
From cash birthday gifts and inheritances to larger-than-expected tax refunds, make an effort to save a portion of any windfall for your retirement. And, when you get a pay raise, give your nest egg a raise, too. Some experts advise saving at least half of any windfall, pay raise, or bonus for your retirement. Then use the other half to splurge on yourself.
What If You’re Still Coming Up Short?
If it looks like you’ll still fall short of the TSP benchmark mentioned above, connect with an FRC® trained advisor who fully understands your federal benefits. Together, you can develop strategies to help get you up to speed.
