January 15, 2021

Edited 01/15/21

Your 2021 Plan for Retirement

There’s no better time than the start of a new year to kick your retirement savings goals into gear.

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Already cheated on your healthy eating resolution with a chocolate chip cookie? Don’t worry, your secret is safe with us. We know that working toward long-term goals—whether it’s a cleaner diet or growing your retirement savings—isn’t about non-stop perfection. It’s about taking small, manageable steps that, over time, make a giant impact. 

Of course, it doesn’t hurt to get those small steps going with a bit of a jump start, and there’s no better time to do so than the beginning of a fresh new year. Follow these steps to ensure that by this time next year, your retirement piggy bank looks a whole lot bigger.

What’s your plan?

Even if you’re the planning type, making an actual savings plan can be daunting. But it doesn’t have to be! There are savings plans, both formal and informal, to fit every lifestyle and budget. Check out these options:

  • 401(k)s, IRAs, and other qualified retirement plans: If you have an employer-sponsored 401(k) or your own IRA, maxing it out is a smart way to help your savings grow. And don’t forget that if you’re 50 or older, you’re able to start adding catch-up contributions of an additional $6,500 per year to your 401(k) and $6,000 to an IRA. Once you hit 59 ½, it’s smart to let that money sit until you have to take an RMD, if you’re able. That way, your cash will have more time to grow. 
  • Take the market into account: It’s not unusual for younger savers to put some cash in high-risk accounts, as they’ll generally have more time to earn some of that money back if the market tanks. But if you’re hitting retirement age, you might want to keep a closer eye on market volatility and your current stock-to-bond ratio. Typically, the older you get, the higher you want the bond side of that ratio to grow.
  • Take advantage of your HSA: If you have a Health Savings Account (HSA), you don’t have to leave that cash sitting in a savings account. Instead, transfer the money to an investment account (while still being able to withdraw it if you need it for medical bills). Then, when you hit 65, you can take penalty-free distributions from that account for any expense you like, even if it has nothing to do with your medical bills. 
  • Automated Savings Solutions: If you don’t have a dedicated retirement savings plan and find it tough to hand over a portion of your monthly income to savings, you might find luck with automated savings plans. When your paycheck hits, get into the habit of automatically setting aside either a dollar amount or a percentage of your income directly into your savings account. Sometimes, your bank or savings plan can do this automatically for you, and even add annual awards to the chunk of change you put away. That makes it an easy way to grow your savings even without (or in addition to!) an investment account.

Break out your fine-tooth comb.

Even if you have the best of savings intentions or apps, though, it can still be tough to find the extra funds to dedicate to your savings. The start of the year is a great time to go over your budget with a fine-tooth comb, being realistic about the areas where you could cut back on spending. Here’s a few places to look:

  • Take advantage of discounts: Never be afraid to ask if you’re up for a discount! Everywhere from happy hours at your favorite restaurant to discount offers when you travel, many places offer various discounts. A great place to access all these deals is Silvur’s Retirement Store. Right in the app, you can browse and score deals on everything from your groceries to a telehealth appointment or get a prescription drug savings card like Hippo to slash your prescription drug spending by 97%. 
  • Look into tax savings: Depending on your state, income level, and age, you may be able to take advantage of tax freezes or exemptions for older adults. For instance, New York homeowners aged 65 and older with an income of $29,000 or under qualify for a tax exemption of 50% of their home’s appraised value. Once you hit 65, you can also take a higher standard deduction and may qualify to deduct medical or dental expenses that exceed 7.5% of your adjusted gross income. Using tax software like TurboTax, H&R Block, or TaxSlayer can help you identify and take advantage of these savings.
  • Think about downsizing: Downsizing can have tons of benefits, both financial and otherwise. Moving to a smaller condo in an active community could be a great way to make new friends and score you a chunk of change from a home sale that you can put directly toward your savings. Or maybe you realize that becoming a one-car household helps you finally lead a more active lifestyle, while also lowering your monthly car and gas payments.

Social Security: Now or later?

You may have already begun taking your Social Security benefits at age 62, which is great! You’ve earned it. But if it’s possible for you to hold off and wait, you’ll be able to receive higher payouts and add more to your savings in the long run. What you’ll get looks a little different depending on your age, since the full retirement age has slightly risen over time. 

For example, if you were born between 1943 and 1954, your full retirement age is 66. That means that starting at age 66, you’ll get 100% of your benefits (as long as you accrued at least 40 credits to your benefits throughout your working life, or the equivalent of working at least 10 years).  But if you hold off till 67, you’ll start getting 108% of your benefit each month, and if you can wait until 70, you’ll earn 132%. 

Since the figures are different for everyone, the best way to figure out how much you would make by taking Social Security now or delaying it is through the SSA Retirement Estimator – or use Silvur’s easier-to-understand Social Security benefits calculator. By entering your current age, potential retirement dates, and other information, you can see what your monthly payments will look like depending on when you take them, and implement your savings plan based on those potential earnings.

Workin’ for a Living

If you’ve recently retired and are loving (and can afford!) the job-free lifestyle, keep on enjoying it! But if you’re itching to get out of the house or aren’t thrilled with your current income levels, starting a part-time job can be a fun and fulfilling way to stay active and boost your savings. 

When looking for a part-time job for retirees, you might find yourself with some freedom to pursue job avenues you weren’t able to before. But starting a job search from complete scratch can be overwhelming. Here are a few questions to ask yourself that will help narrow down your search.

  • Where do I want to work? Ask yourself what your easiest commute would be, since getting bogged down by a long commute is a great way to put more time and energy into a part-time job than it’s worth. Maybe you live within walking distance of a school, and could pick up shifts as a crossing guard, administrator, or aide. Or is your dream commute the walk from your bed to your kitchen table? Check out remote positions for seniors and retirees like consultants, transcriptionists, career coaches, or virtual assistants. Sites like FlexJobs can be a great place to start your search for remote work.
  • What am I passionate about? A part-time job for extra income can be a great place to explore passions you didn’t always have time to while you were grinding from 9 to 5. Are you a pet lover? Maybe your local animal shelter or vet’s office is hiring. Interested in politics? See if a local campaign or a community organizing office needs you. Got a green thumb? Check out the job board at your favorite home and garden store. 
  • Who do I know? Letting people around you know you’re looking for work is the best way to find a great gig. Maybe the head of an organization you volunteer at has been thinking about hiring a part-time bookkeeper, or the library you frequent is looking for someone to spearhead a senior outreach initiative. Put feelers out with friends and family—being specific about your job wants and needs—and don’t be afraid to follow up on leads that spark your interest.

To get an even better idea of where you stand, you can calculate your Retirement Score using Silvur’s app. Knowing how far your current levels of savings will carry you into retirement can help you better decide what savings initiatives you want to implement in order to kick off your 2021.