How do I get back on track with my retirement savings?
“Ask the Financial Expert” is a GreenPath series assisting readers with the pressing financial questions of everyday life. In each article, Jeffrey Arevalo, a Financial Wellness Expert with GreenPath since 2006, uses his strong passion for helping others as well as strong financial education and effective money management tools to help make a difference in people’s lives.
Q: I recently had to dip into my retirement accounts to pay for food and gas for a few months. How can I best get retirement savings back on track?
A: Planning for the future, which includes a comfortable retirement, takes time and consistency. But the daily ups and downs of life can mean taking a detour from your carefully laid plans. It doesn’t mean you can’t regroup and get back on track.
If your employment and income situation is stable again, with priority bills and savings within your budget, you should be able to resume your retirement savings contributions or even increase contributions moving forward. If possible, for a time, increasing the amount you’re putting into a savings plan can help replenish the retirement savings you withdrew.
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Here are some things to consider:
- Depending on your age, there are different limits on the amount of tax free yearly contributions you can make. Check to see what your limits are to determine if you have any additional wiggle room to make additional contributions this year or in coming years.
- Consider adding any bonus income, stimulus funds or refund money in the future towards the retirement account after all other priority bills are met. It may be tempting, especially after a stressful time, to want to treat yourself with the extra money, but you’ll be happy that you regrouped your retirement instead.
- Always treat retirement savings like a priority bill. It is an essential debt you owe yourself — security for your future — just like you need to pay your mortgage or auto loan.
- Deduct your retirement directly from paychecks. As they say, set it and forget it. Money that you don’t have to directly transfer is out of sight, out of mind and accumulates while you’re busy getting on with life.
- Talk to a financial advisor about your concerns and if there are realistic changes to be made. Realizing you are not on track with your retirement savings often means making some adjustments. A Financial Advisor is an objective professional who can help you understand your options.
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