5 Money Moves to Make if You've Been Slacking on Savings
It’s been a crazy year. Many have lost their livelihoods. Some have incurred high healthcare costs. One survey found that one in four adults aged 40-65 had to dip into retirement savings, and at a rate that will take them on average six years to replenish. Almost no one has spent and saved their money as they’d planned.
If your retirement savings took a hit this year, these 5 tips are for you—it’s not too late to get back on track.
This is a special kind of retirement savings account whose defining trait is that if you’re age 60 or older, you don’t have to pay income tax on your withdrawals. This makes it a popular savings tool—and while some begin putting money into a Roth IRA from the get-go, others choose to convert some of their savings into on down the line. If you haven’t done so already, it’s a smart move to make. It can save you big time in a couple decades, helping you to make up for lost savings in 2020.
Even if the word “hustle” doesn’t sound like a verb you wanted to define your retirement, there are a host of part-time jobs that let you supplement your income without leaving the comfort of your home. From freelance tutoring to bookkeeping, and from taking online surveys to caregiving, there are a range of options for ways to make a bit of income without rejoining the workforce full-time.
As the pandemic has uprooted many, short-term rentals have become increasingly popular. If you’re lucky enough to have a spare room or guest house, you can post it on websites like Airbnb or Vrbo, and invite vetted guests into your space.
To rebuild good savings habits, apps like Acorns help you routinely put money away little by little by automatically investing spare change. Other popular personal finance apps include Mint and Robinhood, and while many prefer to leave their investing to a trusted fund manager, others enjoy these apps easy-to-use interfaces which make saving and budgeting fun and simple.
If you’re fortunate to have sizable savings, try not to dip into them—letting them grow will serve you better in the long run. When you need extra cash, get into the habit of spending your dividends—the passive earning your investments bring in each year—instead of reinvesting them. Some accounts reinvest dividends automatically, so talk to your investment manager if you have one about living off your dividends and letting your savings grow untouched.
If you try any of these tips, let us know in the comments below. How did it go? Do you have any other suggestions that might help other readers—either success stories or cautionary tales? Let us know.