How to Double Your Retirement Nest Egg

Boost your chances of being able to leave the workforce for good.

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Some individuals may never retire because they love their work and can't comprehend stopping until they can no longer physically or mentally accomplish their tasks. However, this is not the most common reason for continuing to work during advancing years. Many who choose not to retire do so out of necessity. They may have underestimated their needs in retirement or failed to reach their nest egg target.

However, if you have enough time remaining before you would like to retire, you can take a number of steps to double your net worth. Here’s how to give yourself a better chance of leaving the workforce for good.

[See America's Best Affordable Places to Retire.]

Invest in the best funds. If you look at your 401(k) and see expensive investments and high fees, switch to lower cost index mutual funds. Not every company offers a selection of high quality, low-cost mutual funds, so it might be worthwhile to make the company's management aware of your dissatisfaction. Investing in funds with low fees could save you hundreds of dollars every year.

Get a 401(k) match. Make sure to take advantage of your company's matching contribution to your 401(k). This is the simplest way to double at least a portion of your money.

Max out your IRA. Whether you choose a Roth IRA or a traditional IRA, invest the full amount each year. Opening an IRA as soon as you begin earning income is a fantastic method for giving yourself a better chance to be able to retire.

[See 5 Misunderstood Retirement Rules of Thumb.]

Rebalance your investments. If you have multiple investments, decide on an asset allocation strategy that fits your level of risk tolerance and your need for growth. Once each year, rebalance your portfolio by selling and buying the funds necessary to return to your ideal percentages in each asset type, such as stocks and bonds. This technique ensures you can cash in when any asset type experiences oversized returns. It also allows you to purchase more of an asset type when it is offered at a lower price.

Make a smart home purchase. The biggest expense for many families is a home mortgage. If you buy a house no bigger or fancier than that which meets your needs and shop around for the best mortgage rates, you have more money to direct towards your retirement. From a psychological standpoint, you could also experience less lifestyle inflation by staying in a smaller home. Your perceived needs in retirement are related to your lifestyle before retirement. Stay humble now and your needs will remain simple later. In addition, if you purchase a house you cannot afford, you may jeopardize your nest egg in order to remain in that house.

[See How to Invest for Retirement Without a 401(k).]

Downsize in retirement. While moving somewhere where the cost of living is lower doesn't affect your nest egg, it does expand how far each dollar you do have can go. Downsizing allows you to turn one of your biggest assets, your house, into cash.

It is easy to neglect to factor in inflation or make poor investment choices when planning for the future. These steps for doubling your nest egg will give you more freedom to choose a new path for your life when the time is right.

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