Boost the performance of your IRA by implementing these 3 strategies.

According to the Federal Reserve, the typical savings amount for Americans between the ages of 65 and 74 is $200,000, which is considered a substantial sum. However, a survey conducted by Northwestern Mutual revealed that Americans believe an average of $1.46 million is needed to retire comfortably.

Undeniably, there is a significant disparity between that figure and the average retirement savings of older Americans. The positive aspect is that by adopting a suitable approach, you can establish a solid financial foundation for your retirement. retirement account for individuals A balance that is much closer to $1.46 million than $200,000. Here’s a guide on how to boost your savings for the ideal retirement you have earned.

Establish automated payments

A convenient feature of 401(k) plans is that they are funded automatically. Upon enrolling with your employer, you select the percentage of your income you wish to allocate towards the plan, and this amount is taken out of your salary before it is deposited into your bank account. This automated process assists numerous 401(k) participants in staying committed to their savings goals.

You can also arrange for your IRA to have automatic transfers. Simply determine the amount you can comfortably contribute each month and then set up the transfer accordingly. A checking account is a type of bank account that allows you to deposit and withdraw money, as well as pay bills and make purchases using checks or a debit card. Whenever you receive your paycheck, it is a good idea to ensure that IRA contributions are consistently made and not forgotten.

2. Invest wisely

There are many investment options available for your IRA, but if you are looking to maximize growth potential, investing in stocks is a wise choice.

IRAs offer the advantage of holding individual stocks, unlike 401(k) plans that usually restrict the investment options to a selection of funds. This flexibility lets you personalize your investment portfolio by selecting specific stocks that have the potential to outperform the market. stock market .

If you are not comfortable with investing, then you may not want to pursue it. have Instead of purchasing individual stocks, you have the option to invest your IRA in an S&P 500 ETF. This means you are investing in a collection of the 500 biggest publicly traded companies currently available.

How could this benefit your savings? For instance, if you contribute $300 per month to your IRA from age 30 to 65, and the stock market has historically provided an average annual return of 10% over the last 50 years, achieving a similar return could result in a balance of approximately $976,000.

Allow yourself ample time to increase your savings.

Beginning to fund an IRA at a young age can be challenging. Young individuals may have low starting salaries and various expenses to manage. However, the longer you allow your IRA to accumulate funds, the greater the potential for a larger balance when you reach retirement age.

In the previous example, it was demonstrated that by setting aside $300 every month for 35 years with a 10% return, the total amount accumulated would be $976,000. By increasing the saving period by five years, the final balance grows to nearly $1.6 million.

You don’t even have to begin making contributions to an IRA for that. the minute When you begin working at the age of 25 and save $300 every month until you are 65, it provides you with some flexibility in the early stages of your career to concentrate on your immediate expenses.

You should have a fantastic retirement experience from beginning to end. However, achieving a comfortable lifestyle during retirement requires financial planning. By making strategic decisions with your IRA, you might be pleasantly surprised by the amount of wealth you can build up by the time you reach your golden years.