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Maximizing your savings

Even living lavishly isn’t your retirement goal, you’ll still want to maximize your income during your golden years and one way to do this is maximizing your savings.

Social Security was the most common source of retirement income in 2022, according to the Federal Reserve, but 79% of retirees also had one or more sources of private income. This included 56% with a pension, 42% with interest, dividends, or rental income, and 32% with labor income.

Your Social Security benefit can help you get by, but it likely won’t be enough to live on comfortably. A pension can also help, but not everyone has a pension, so it’s important to be proactive and take charge of your own retirement.

You’ll want to supplement any guaranteed income, such as your Social Security benefit, pension (if you have one) and fixed annuities (if applicable) with investments such as stocks and mutual funds to help you keep pace with inflation.

Make use of tax-advantaged retirement accounts. Most financial experts recommend diversification and the appropriate asset allocation for your age as the keys to a successful retirement.

If your employer offers to match at least a portion of your contributions to a 401(k), it makes sense to try to contribute enough to get the greatest match you can. If you don’t have an employer-sponsored retirement plan, you can consider other options, such as a solo 401(k).

Other options include an individual retirement account (IRA) or Roth IRA. If you think your income will be higher in retirement, it may be better to pay taxes now (with a Roth IRA). If you expect your income will be lower in retirement, you may want to consider a traditional IRA (since you don’t pay taxes until you withdraw funds in retirement—and you can grow your money tax-free in the meantime).

It can help to talk to your financial advisor about the best path forward, depending on your personal circumstances.

While cutting back on expenses is one way to increase your cash on hand (and the amount you can save and invest), you can also look at ways to increase your overall income. That could mean taking on a side hustle, asking for extra hours or overtime, or looking for a higher-paying job.

Perhaps you won’t be able to reach the same retirement savings as the top 10%, but by living below your means and investing wisely, you should still be able to retire comfortably — and maybe even enjoy a few luxuries.


Follow These Steps if you Want to Retire Early

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About the Author

Vawn Himmelsbach

Vawn Himmelsbach

Freelance Contributor

Vawn Himmelsbach is a journalist who has been covering tech, business and travel for more than two decades. Her work has been published in a variety of publications, including The Globe and Mail, Toronto Star, National Post, CBC News, ITbusiness, CAA Magazine, Zoomer, BOLD Magazine and Travelweek, among others.

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