By Steve Allender, CRPC®
Are you approaching retirement but worried you aren’t meeting your savings goals? If so, you’re not alone. Over the course of their careers, many nurses find themselves balancing student loan repayment with saving for the future, often sacrificing retirement savings to pay the student loan bills that arrive in the mailbox (or inbox) every month.
Because student loans can be so burdensome, nurses in their late 40s and 50s may find themselves scrambling to save for a retirement that is suddenly a mere 15, 10, or 5 years away. And because nursing is a taxing profession, you certainly don’t want to have to work forever.
The good news is, it’s never too late to start saving for retirement. Catching up for retirement requires strategic planning and may entail some sacrifices to your current lifestyle, but the steps you take now may ultimately result in more security for your future. To get started on your catch-up strategy, here are 3 things you can do to save more without having to work longer.
Lower Your Current Expenses
You might find yourself needing to generate more income to save more for retirement. But we don’t blame you if you don’t have the energy to work consistent overtime shifts for the next few years. Instead, you can stretch your current income by lowering your monthly expenses.
Lowering your expenses doesn’t have to be painful. With a comprehensive budget, you may find easy categories to cut back on, such as subscriptions to magazines or streaming services you hardly use. You can also cut back slowly on other categories—such as dining out or clothing purchases—without nixing the category altogether. (You’ll be surprised at how much you can save over time by making small changes to your spending habits.)
If you have the capacity to cut large expenses, you can fast-track your retirement savings even more. For example, if you currently live in a large house with your family, consider downsizing to a smaller property in the next few years as your children move out. Or if you live and work near RTD light rail or bus stations, you could use public transit to save on monthly fuel costs.
Increase Contributions To Tax-Deferred Retirement Accounts
Once you’ve identified how to save more money, it’s important to contribute as much as you can to your tax-deferred retirement accounts, especially if you have an employer-sponsored retirement plan that offers matching contributions. At the very least, you should contribute the amount needed to receive the maximum employer match.
From there, increase your contributions as much as you can. Tax-deferred retirement accounts allow you to save more of your earnings while also decreasing your taxable income, which lowers your tax burden. If you’re struggling to boost your contributions immediately, gradually increase your contributions by 3% to 5% per year, or at whatever percentage you can manage.
Contribute To A Roth IRA
Besides contributing to your employer-sponsored retirement account, you may also want to contribute to a Roth IRA. Roth contributions are made with after-tax income, but you won’t have to pay taxes on the money you withdraw during retirement.
Finding a balance between contributing to your employer-sponsored account and a Roth IRA can help lower your tax burden in retirement. If you’re under 50, you can contribute up to $6,000 to your Roth IRA in 2021. (1) If you’re over 50, you can contribute an additional $1,000 catch-up contribution. These limits may increase in the future.
Partner With Professionals Who Can Help
Catching up for retirement can feel overwhelming and scary. And the truth is, you may need more in-depth strategies to make the most of your remaining catch-up years. If you need help developing a plan for a more secure financial future, consider partnering with professional financial planners who know the challenges you face.
Nurses give a lot of themselves to take care of others. At Acute WealthCare, LLC, we want to make sure you’re taken care of as well. To see how we can help you develop a customized plan for your future, schedule a 15-minute introductory phone call to get started.
About SteveSteve Allender is a Partner and Wealth Advisor at Acute WealthCare, an independent, fee-based comprehensive financial management firm. Steve is a Chartered Retirement Planning Counselor (CRPC®) who spends his days helping women in the healthcare professions build a secure financial future through investment management and financial planning. Steve loves building long-term relationships with his clients and helping them carry their financial burden so they can focus on what they love and how they want to spend their time. While Steve has officially been in the financial industry for over 20 years, he became hooked on learning about finances as a child when his parents taught him the basics of saving, spending, and giving. Steve enjoys all the outdoor activities living in Colorado provides, and you can often find him backpacking, snowshoeing, rafting, mountain biking, fishing, and exploring old mining communities. His claim to fame is that he is a Colorado Trail thru-hike completer, covering 486 miles of the most beautiful country on earth. Steve also enjoys a good book about Lincoln and the Civil War, and is committed to his community, mentoring through Save Our Youth and helping the elderly and single moms with household maintenance through the Minute Man Ministry. Learn more about Steve by connecting with him on LinkedIn. You can also register for his latest webinar on What We Do & How We Help.