Saving for retirement can feel like a chore, but it is definitely one that pays off over time.
Thankfully, there are simple ways to regularly increase your retirement investing without feeling like you are cutting into your monthly cash flow. It might be hard to imagine, but there are many people who contribute up to the annual limit into their Thrift Savings Plan account each year. Most of them got to that high contribution rate by increasing their contributions a little bit with every opportunity, so that it wasn't as hard as coming up with a big chunk of money out of nowhere.
Whether you are investing within the Thrift Savings Plan (TSP), through an Individual Retirement Arrangement (IRA), or both, adding a little bit more to your contributions regularly is a painless way to build up your savings even faster.
There are five easy-to-identify times when it won't hurt your wallet to increase those contributions.
1. With a Promotion
There are two situations when it is particularly easy to increase your retirement contributions: A promotion is one of them. The increase that comes with a promotion can be anywhere from $100 a month to more than $1,000 per month. As soon as you start getting paid the new amount, log into your TSP account and increase your contribution, or change the automatic transfer to your IRA. It will really add up!
2. With a Time-in-Service Pay Increase
The other really easy time to increase your retirement savings is when you get a time-in-service pay increase. Once again, these can range from around $100 per month to more than $1,000 per month. Same drill: Log in and increase your TSP contributions, or increase the automatic transfers to your IRA. (Keep in mind, of course, the limits on contributions.)
3. Annual Pay Increases
Every year, the Defense Department pay tables are adjusted to reflect the increase in the cost of living. This increase, which is reflected in the January mid-month paycheck (end-of-month for those who opt to be paid only once a month), has ranged from 1.0% to 6.9% over the last few decades.
4. With a PCS Move
This may seem counterintuitive, but a Permanent Change of Station move is a great time to increase your retirement savings. Your entire spending plan is changing anyway, so you likely won't notice that money missing. What's another $20 or $200 when your entire budget has been upended?
5. When You've Paid Off Another Bill
Whenever you pay off a bill, such as a student loan or a credit card, use some of that freed-up money to increase your retirement contributions. If you're feeling really aggressive, you can add the full amount to your retirement accounts, but you probably have other goals, too.
Feeling A Little Nervous? It's OK!
Increasing your retirement savings contributions can be scary if you already feel like your budget is tight. That's perfectly normal. Thankfully, both TSP contributions and IRA transfers can be changed pretty easily, using MyPay for the TSP or your banking or investment app for an IRA. If, after a month or two, you find that you really can't make ends meet, you can scale your contributions back again.
Set yourself up for retirement savings success by using these convenient times to increase your contributions a little bit. After a couple of years, you'll be saving a significant amount and it won't even have been that painful! How great is that?
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