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3: Analyze Your Decisions

Catch-Up Strategies for Retirement Plans

You may be taking this course because you are concerned about your retirement savings. The good news is, there are ways to help you catch up.

  1. Maximize Catch-Up Contributions: Concerned that baby boomers, in particular, have not been saving enough for retirement, the IRS allows catch-up contributions. You can begin making catch-up contributions in the year that you turn 50 – even if your birthday is December 31. For 2017, the maximum catch-up contribution amount is $1,000 for an annual total of $6,500.
  2. Automate Your Contributions: If your employer’s plan allows auto-enrolled contributions (contributions deducted from your paycheck into certain predetermined investments), increase your contribution percentage during an open enrollment period. Even better, if it’s available, use auto escalation to commit to increasing your contributions at a future date to eliminate the need to make such decisions. The thought behind this is, if it happens automatically, you don’t miss it.
  3. Review Investment Allocations: Reviewing investments annually lets you determine if your funds are achieving your goals for growth and that they match your risk tolerance. This is also an opportunity to identify high-fee investments and move money into those with lower fees.
  4. Use Target Date Funds: These funds adjust their portfolios over time and reallocate into safer investments as your retirement date nears.
  5. Work with Your Spouse: Review your retirement plans and those of your spouse or partner to see about using those funds in your overall catch-up strategy.
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How Can You Use Catch-Up Strategies?

Take a moment to review the catch-up strategies to see which ones might work to your advantage. Jot down at least one idea that sounds feasible for you. Now write down some questions you will need to ask your human resource representative or spouse/partner. For example:

  1. How much can I afford to increase retirement savings?
  2. Can I make additional contributions to my employer-sponsored plan?
  3. Can I auto-enroll in contributions?
  4. What investment options are available to help me reach my goals?
  5. What fees do the retirement plans have? If they are too high, when can I change?
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