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6 Habits of Above Average Retirement Savers

By U.S. News & World Report

The average balance for retirement accounts is about $100,000, according to Fidelity. That’s low considering retirees may need their money to last 30 or more years past their retirement date. Retirement account balances certainly rise as years in the workforce increase, but other habits can help you achieve above average results. The earlier these retirement savings habits are implemented, the more likely it is that your portfolio can grow to levels that support your goals.

Here are six habits practiced by successful retirement savers to incorporate into your comprehensive plan.

[See: How to Max Out Your 401(k) in 2017.]

1. Consistently save in tax-advantaged accounts. Among the most important savings habits is consistency. Savers who invest regularly and avoid withdrawals tend to have higher account balances. Tax-advantaged accounts are the best vehicles for optimizing savings. Make it a habit to always save for retirement first. Put your savings on autopilot with your broker and keep investing through bull and bear markets. 401(k)s and other defined contribution plans are an easy way to implement this habit because they are automated for you before you receive your paycheck.

When you start a new job with a 401(k), enroll in the plan on day one. Contribute as much as your monthly budget allows, but aim for the $18,000 maximum if you can. Contribute at least the minimum amount required to receive the company match, if available. If you’re eligible for a Roth IRA, make sure to invest the maximum of $5,500 every year on top of your 401(k). Maxing out your 401(k) and Roth IRA for just five years will put your account balances over the $100,000 mark.

2. Strive to earn more. It should come as no surprise that high earners are often above average retirement savers. When there’s more money, it’s easier to save. But not all high earners are good at saving. In fact, many are inept. But a recent study by Vanguard found that workers who earned $100,000 or more had account balances that averaged $237,061. That’s more than double the average of all savers.

Healthy salary growth from a successful corporate or professional career can make it more comfortable to max out a 401(k). Any excess cash can then be saved in other tax-advantaged accounts such as a Roth IRA, or be invested in taxable brokerage accounts or real estate. As your salary increases during your working years, so does your retirement security, as long as you consistently save and invest.

3. Remain loyal to your employer. The same Vanguard report indicates that defined contribution plan participants who stayed with the same employer for ten years or more had an average account balance of $188,744. Ten years is sufficient time for contributions and market returns to compound into significant savings. Longer employment periods also suggest higher salaries.

Though employer loyalty tends to help retirement savings, it can also be costly. If you’re stuck in a job with no promotion opportunities, you may be better off finding a new employer. When switching jobs, retirement saving is often neglected, so always consider the implications of a new job on your retirement nest egg. Make sure to roll over balances from your old plan to an IRA and enroll in your new employer’s plan on the first day. Use any salary increase to bump up your contribution percentage.

[Read: How to Get a Good 401(k) Match.]

4. Think long term. Successful retirement savers have an eye on the future and are less inclined to splurge on short-term pleasures and shiny objects. Workers who max out their 401(k)s in lieu of luxury cars and frequent expensive dinners know that their sacrifice today will pay off many times years later.

Saving enough for retirement requires a long-term plan, but also short-to-mid-term action items along the way. Losing sight of the end goal by thinking short-term can lead to a savings shortfall.

5. Ignore market fluctuations. Financial advisors recommend an annual retirement account checkup to make sure allocations are aligned with retirement goals. Aside from an annual adjustment, above average retirement savers mostly ignore their account balance and daily market fluctuations. Trying to time the market is a losing strategy, especially for a typical worker with limited investing experience. If tempted by market timing, do so in your non-retirement accounts. Don’t put your retirement money at risk.

The best strategy for most everyone is to contribute to accounts regularly and keep your hands off. The more emotion involved, the more likely you are to make a mistake.

[See: 9 Ways to Avoid 401(k) Fees and Penalties.]

6. Avoid excessive fees. Index funds and ETFs have consistently outperformed most managed mutual funds over long periods of time. Managed mutual funds often carry larger fees which detract from returns. Fund managers are challenged to consistently beat indexes year after year and often fail. Investing in broad index funds quickly diversifies your portfolio among many investments, spreading risk while participating in long-term market gains.

When choosing an IRA for your retirement savings, make sure you have access to a wide variety of funds, including various index funds and ETFs. If your 401(k) lacks low-cost index fund options, contact your human resources department to request more variety.

Implement these six habits of above average retirement savers as early as possible to maximize your wealth and retirement security.

Craig Stephens is a blogger at Retire Before Dad.

More from U.S. News

10 Tips to Boost Your IRA Balance

How to Save for Retirement on Less Than $40,000 Per Year

5 Challenges of Early Retirement

6 Habits of Above Average Retirement Savers originally appeared on usnews.com

Don’t Settle for Student Loans to Pay for Online Education

By WTOP Staff
Online college programs are becoming a more popular choice for prospective students, with one study finding that more than 6 million students enrolled in at least one online course in fall 2015. The popularity of these courses can be attributed in part to their flexibility with working adults' schedules, students' ability to progress more quickly through online programs and, oftentimes, cheaper tuition. [See 10 low-cost online bachelor's programs for out-of-state students.]Online degrees can be beneficial to many college students, but some studies have shown online learners complete their programs at lower rates than students at traditional brick-and-mortar campuses. Individuals with student loans but no degree comprise two-thirds of defaulted borrowers. Though these numbers are not encouraging, just like for traditional programs, there are ways to reduce how much you'll need to borrow for an online program to ensure you won't become one of these statistics. Don't just settle on borrowing student loans to cover the whole cost of your program and living expenses. Instead, start thinking about how to cut costs and cover your balance in different ways, such as the following. -- Grants and scholarships: Even though you are taking an online course, you can still apply and receive grants and scholarships. But your first step should be to complete the Free Application for Federal Student Aid, commonly referred to as the FAFSA, which will allow you to receive a Pell Grant if your expected family contribution is low enough. The EFC criteria and award amounts are adjusted annually, but the 2017-2018 academic year awards range from $606 to $5,920, which could significantly lower the amount you borrow annually. Your next step is to apply for scholarships. You can start by checking online scholarship search engines, such as the Salt Scholarship Search, College Board's BigFuture and Peterson's. But don't forget to take advantage of local organizations and your school's financial aid office. Both may offer scholarships that you can't find with a national scholarship search. [Review these 10 sites to kick off your scholarship search.]For instance, organizations like the Elks Club, Knights of Columbus or the Rotary Club typically offer scholarships annually to local students. Just because you're going to school online doesn't mean you're ineligible. Visit your local library for scholarship listings, and ask around town. You might be surprised how many local organizations offer scholarships. While these scholarships typically aren't large, every little bit counts. Each dollar you receive in a scholarship is a dollar you don't have to borrow and pay interest on. -- Work-study: Another option for online students may be work-study awards. Not all students enrolled in online programs are eligible, but students at some schools -- including, for example, SUNY Empire State College and Liberty University -- are. Work-study awards are not given upfront like scholarships and grants. In most cases, they are an offer to earn up to the awarded amount if you secure an eligible work-study job. While there is a misconception that all work-study jobs must be on campus, students can work for off-campus, nonprofit or public employers as long as the work is in the public's interest. You may be able to work for a for-profit employer if the job is relevant to your course of study. No matter who the outside employer is, it will need to have an established agreement with your college for you to receive work-study funds. Remember, to be eligible for federal financial aid, you must be enrolled and pursuing a degree or certificate. If you're not working toward a credential, Pell Grants and work-study won't be option, but you may still be able to take advantage of private scholarships -- just be sure to read the eligibility criteria carefully. [Explore what to know about financial aid in online programs.]-- Pay as you go: One of the great benefits to enrolling online is the flexible schedule, which can allow you to complete your college coursework around your responsibilities. But prospective students often overlook using their part- or full-time job earnings as an option for paying for college. Almost 80 percent of college students in 2015 worked at least part time while attending classes, according to the National Center for Education Statistics. By budgeting and thinking strategically about your college costs, you can likely reduce your dependence on student loans by paying a portion out of pocket. Many -- but not all -- online programs are less expensive than traditional programs and often have shorter payment periods. Six, eight or 10 weeks are common course durations. Because of the frequency of payments in an online setting, you may be well-placed to pay as you go and possibly avoid borrowing altogether. Attending college online and avoiding student loans may be challenging, but if you are willing to put in the effort, you can limit the amount you need to borrow. More from U.S. News Q&A: Understanding Student Loan Discharge Eligibility Student Loan Refinancing Isn't Right for All Borrowers
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