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Increasing Your Retirement Savings

We hope you’re doing well! We want to share two pieces of advice regarding retirement savings strategies and getting yourself on track.

1. Automate your IRA retirement contributions.

If you make 401(k) or 403(b) contributions, you are already using automation via your company’s payroll department. Why stop there? Automating contributions to your other retirement accounts can be just as easy and provide you with several advantages:

  • Benefit from dollar-cost averaging: An automated retirement savings contribution reduces market timing risk and gives you a dollar-cost average price over time. This strategy eliminates the guessing of when to buy and when to sell. Trying to time the markets is one of the biggest mistakes investors do with retirement funds, and they end up hurting their performance. Also, buying during market downturns can lower the average cost of the investments and present more of a buying opportunity than you think.

  • Plus, you won’t have to worry about missing the IRA contribution deadline each year (April 15th, or whenever you file your taxes).

  • Avoid excess spending: Sometimes it just feels like you have more money to spend than you do. Automating retirement savings ensures your plan stays on track because it comes right out of your checking or savings account. Of course, it is nice to buy yourself a big purchase periodically — just keep those golden years of retirement in mind! Discipline now goes a long way over time.

  • Lower your stress: An automated savings plan lowers your stress level! No more regrets, deadlines, or “should have, would have, could have.”

  • Save time: Everyone wishes they had more free time. Automate your retirement investing and put some precious hours back into your free-time bank by taking the thought and process completely out of it. Eliminating even one task can help.

2. Pay off all high-interest debt first, no matter the amount.

Investing for retirement while carrying high-interest debt can be counterproductive. Life and debt happen but making minimum payments at high-interest rates for an extended period seriously eats away at your future retirement savings. Just think — the S&P 500 returned 16.26% in 2020 *. Paying high interest on debt to a credit card issuer robs you of making that 16.26% return *. To maximize your retirement savings, pay off all high-interest debt as quickly as possible and start earning interest instead of paying it!

If automating your investments or formulating a plan to eliminate debt appeals to you, please feel free to contact us. We would be happy to help!

* The performance data given represents past performance and should not be considered indicative of future results. Principal value and investment return will fluctuate, so that an investor’s shares when redeemed may be worth more or less than the original investment. Fund portfolio statistics change over time. It is important to note that the funds that pass the screening today are not necessarily the same funds that would have passed the same screening and been selected in the past. The fund is not FDIC-insured, may lose value and is not guaranteed by a bank or other financial institution.

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