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Here's how to get your retirement savings back on track

Many Americans put their retirement savings goals on the back-burner this past year to handle more immediate cash flow needs arising from the pandemic and ensuing shutdown of much of American life.

As the COVID-19 vaccines roll out and the economy begins to look more like normal, many people may start again thinking about their golden years and how to plan to get there. But they may feel paralyzed on how to restart their savings.

"It can feel daunting to get back on track," said Nicole Gopoian Wirick, a certified financial planner in Birmingham, Michigan. "For those who feel overwhelmed and defeated, I encourage you to focus on making small, attainable changes over time. Give yourself grace and start taking small steps in the right direction."

Here are the steps to get back on track with your retirement saving and get ahead as you become more financially secure.

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Find extra money

Once you become more financially stable, that's a good time to look at your budget again. Identify areas where you can find some money that can be put towards your long-term goals.

"I like to look at the meat and potatoes of your cash flow," said Tess Zigo, a certified financial planner in Lisle, Illinois. "The 80/20 rule often applies to your finances, so focus on the biggest expenses and try to figure out if you can make modifications to reduce the 20% of items eating up your budget."

Save for an emergency first

If there was ever a time to raid your emergency savings, 2020 was it. Maybe you temporarily lost your job or needed to help other family members with expenses. In any case, if your rainy day funds are gone, start there. You don't want to take from your retirement funds in the next emergency.

"The pandemic and resulting job losses should underscore the importance of having a solid emergency fund, even before retirement savings," said Kristin Sullivan, a certified financial planner in Denver. "So, make sure you have at least one month — preferably three — of fixed expenses in a savings account. Then you can start up your retirement savings again."

Restart 401k contributions

If you temporarily stopped contributing to your 401k, so you could bring home a little more money each paycheck last year, maybe it's time to start back up if you're financially sound. You don't have to match the same level if you want to be cautious.

"Restart contributions at a level you are comfortable with and increase when you can," said Joyce Streithorst, a certified financial planner in Melville, New York. "Every contribution brings you closer to your retirement goals."

Increase 401k contributions when ready

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At some point, you'll want to increase your contributions when money is flowing. The ideal is to sock away 15% of your pre-tax income, including any contributions made by your employer.

"If money is tight, do something small like 4% into a retirement plan," Sullivan said. "Use your plan's auto increase feature to raise that by 1%-2% per year. Give yourself a break and think long term."

Pay back

If you took advantage of new rules under the CARES Act that got rid of early withdrawal penalties or made it easier to borrow more from your 401k, start thinking about how to repay those funds.

"For those with withdrawals, that want to repay them, look to pay them back quicker, then convert to saving," said Robert Schultz, a certified financial planner in Atlanta.

Play catch up

If you are age 50 or over, you typically can contribute more than the annual contribution limits to 401k and IRA plans. This will help you get further on track if you're behind on saving for retirement.

The 401k contribution limit for 2021 is $26,000 for those 50 and over. The IRA contribution limit for 2021 is $7,000 for those 50 and over.

Open an IRA

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In addition to contributing to your 401k, consider contributing to a traditional IRA or a Roth IRA (if you meet the income limits). If you do it quickly, you can deduct any contributions you make to an existing traditional IRA before tax day on April 15 from your 2020 taxable income. Roth IRA contributions aren’t deductible.

Get ahead by maxing out

"Find out the maximum contribution limit for each retirement plan you can contribute to and the contribution deadline then make a plan on how to reach this level of savings," Streithorst said. "If not for 2020, then for 2021 and beyond."

The 401k contribution limit for 2021 is $19,500 (plus an additional $6,500 for those 50 and over). The IRA contribution limit for 2021 is $6,000 (plus an additional $1,000 for those 50 and over).

Save outside of retirement plans

If you've done all of the above that you're eligible to do, congratulations on getting this far! Any additional money you have should be invested outside of your retirement plans. If you retire early, you can tap these funds penalty-free.

"Start a non-retirement brokerage account with additional excess funds," Schultz said.

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Janna is an editor for Yahoo Money and Cashay, a new personal finance website. Follow her on Twitter @JannaHerron.

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