When it’s time to retire, a large nest egg is going to help more than a small one. Whether a person is just starting their career or they’ve been working for a number of years, there are actions they can take to help increase the dollar figure of their account when they retire.
Get started early
A top way to ensure that a retirement account grows large enough for a person to live comfortably after they stop working is by getting started as early as possible. Every year that money flows into a retirement account and helps the total amount accumulate, especially if it’s invested in assets that pay dividends. These can be reinvested into more dividend paying assets, which will only increase the number of dividends that are paid. The power of compounding can really increase a large account in future years.
Setting a goal
Having a goal for the dollar amount needed to retire helps a person know how much they should save and invest. They may even want to set benchmarks along the way to ensure that their progress is sufficient enough to reach their goal. These benchmarks could be analyzed every month, six months or year, depending on the preference of the investor.
Save some each month
One of the best ways to ensure that a retirement account is well funded when a person retires is to invest money into it on a regular basis. By using the method of dollar cost averaging, a person won’t be buying extreme highs and lows. Instead, they will average out their cost for investments. By setting aside and saving a few dollars each month, it allows a retirement account to grow larger through the years until it’s finally needed.
Utilize extra funds
While a holiday bonus could be spent on upgrades to a vehicle or a three-day vacation, a much better plan would be to stash that extra money away and put a portion of it or 100 percent into a retirement plan. These type of extra funds shouldn’t be treated as “found money.” It’s okay to purchase a small item with them, but the rest could be used to make a big leap towards a person’s retirement goal.
Meet an employer’s match
If a person works for a company that offers to match a certain percentage of employee contributions each year, a person is basically getting free money with this opportunity. It always makes sense to contribute the amount that’s needed to take advantage of this benefit.