Get Your Retirement Plan Back on Track
You don't have to implement all of these steps, but prioritizing your efforts will maximize the results.
Cut Daily Expenses
Look at ways to reduce your living expenses. Plug spending leaks and track your expenses to find money that you can put toward savings. Take SAM's free Spending and Saving course to get started.
Replenish Your Funds
Rebuild your emergency savings fund first. Without an emergency fund, unexpected car repairs or medical bills can lead to credit card use and short-term debt or force you to raid your retirement accounts and trigger penalties. Use this calculator to determine how much you need to set aside for emergencies.
If you borrowed from an IRA, return all money to a new rollover IRA account within 60 days. If you wait longer than 60 days to replenish it, the money will be considered a withdrawal and will be subject to taxes and possible penalties.
If you took out loans from a 401(k) or a similar plan, pay off the loans as soon as possible. Most plans require you to repay the loan before you can start making any new contributions.
Start Contributing Again
Begin making contributions through your employer's retirement plan, such as a 401(k) or 403(b) plan. Contribute up to the full amount of any matching contributions offered by your employer.
Open a traditional IRA or Roth IRA. Once you are contributing up to the full match on your employer plan, or if you do not have an employer plan, the next step is to contribute up to the full amount allowable for the current year to a traditional IRA or a Roth IRA.
After you’ve maxed out your IRA contributions, make additional contributions to your employer’s retirement plan, up to the current year’s limit. If you’re over 50, you legally can make extra contributions to individual and employer retirement plans.
Set up an automatic payment to your IRA or a paycheck deduction to your employer plan. Treat retirement saving as an ongoing bill, rather than an optional extra.
To find out how your retirement savings are shaping up, try this nest egg calculator.
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