4 Strategies to 'Enhance' Your Retirement

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At the end of 2022, the new SECURE 2.0 Act became law. The follow-up legislation to the 2019 law was built around the laudable goal of "enhancing" all Americans' retirement. I wrote a separate article here detailing a few of the key provisions.

I was preparing for an interview on SECURE 2.0 and spent an inordinate amount of time trying to get, "Set every community up for retirement enhancement," to roll off my tongue. Not so much. While the new law ushers in several key changes to the retirement landscape, the burden of truly enhancing your own retirement still lands squarely in your lap. New tools and opportunities such as those offered by SECURE 2.0 are welcome, but success or failure still hinges on your action or inaction.

To that end, here are four things you can do to put yourself in a better place financially, regardless of what happens in the broader retirement landscape.

1. Have a Target

Ever taken a road trip without a destination in mind? Probably not, and it may even seem like a silly question. But the reality is that the majority of Americans have never done any serious retirement planning. What? No road map to retirement? Nope. A recent survey found that only 46% of American workers had even tried to figure out how much money they will need.

I recommend finding some quiet time this year to put a pen to paper or utilize an online retirement calculator to get a sense of where you stand. If you feel you need a helping hand, engage a fee-based financial planner to figure out where you're trying to go and what you need to do to get there. This exercise will give your retirement saving something that's all important -- purpose and direction.

2. Shed Dead Weight

Now, during the time of the year when many (me!) are still trying to recover from holiday overindulgence, do the same with your money. Live leaner, eliminate debt -- and save big. Tightening up your spending habits by eliminating unnecessary expenses and redirecting that "found" money to eliminate debt could save you some serious money in interest expenses and free up cash flow, too. All that, and you may be better positioned in the event of a recession.

3. Save Like There Are a Lot of Tomorrows

Read that slowly: It's easy to mix it up with a similar-sounding YOLO money approach. When it comes to retirement, more is better. More creates flexibility and options. If you're in your 20s, you should consider saving at least 10% of your income for retirement. If you're just getting started in your 30s, consider 15% to 20% -- and beyond that, all that you can because you're making up for lost time.

4. Take Advantage of the Tools

Saving aggressively in the Thrift Savings Plan, your Individual Retirement Account (IRA) or Roth IRA for you and your spouse is another good option. Finally, setting up a brokerage account outside of a retirement plan with an automatic allotment also makes sense. This option has the advantage of being a "no strings attached" account. With most folks retiring from the military in their 40s, an account that's not typically subject to ordinary income tax or doesn't come with penalties for withdrawals before what the IRS calls "retirement age" is a good thing.

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