Saving for retirement can be quite tricky. There is no definite or advisable time to start. However, starting early usually gets the best results. On average, the American retirement savings for working families aged 31 t0 61 is just around $5,000. This amount is very insufficient, most especially if you see yourself getting closer to retirement age. Catching up with these saving for retirement tips might help you get back on track.
21 Easy Saving for Retirement Tips You Should Follow Now
Here’s 10 to get you started – check out our infographic below, and continue reading all 21 in further detail below!
1. Determine how much you need
You can use a retirement calculator to determine how much you should save for retirement.
Here are important details you need to know in order to see how much to save for retirement:
- Current age
- Current amount of savings
- Total yearly income
- How much you’re willing to save in a month
- Your estimated total monthly expenses during your retirement
- Retirement age
- Interest rates for your investment
- Life expectation
Fill up your retirement calculator with your current financial details. From here, you can determine how much you will need to catch up or to keep on track with for your retirement savings. Most retirement calculators provide suggestions on how to improve or keep up with the amount that you need for retirement.
2. Create a saving for retirement plan
Everything starts with a plan. After determining your current scenario with your retirement savings, you can adapt ways to catch up or increase your reserves for the future.
Include the following on your saving for retirement plan:
- Your goal amount to save
- Ways on how you can achieve this amount
- How long or how fast you can save up for this amount
- Contingency plans for unexpected circumstances (sickness, accidents or calamities)
However, the most important thing to consider with your savings plan is to find ways to build more wealth. Doing so helps you achieve your financial goals faster.
3. Reevaluate your budget
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Knowing how much you need for a comfortable retirement and the things you need to do to get there are just the basic steps. You need to reevaluate your expenses to make the adjustments you need to save for retirement. If you do not have a monthly budget, it is important to create one now. Cut out expenses you do not need so you’ll be able to enjoy retirement earlier than you planned. You do not have to restrict yourself with the small pleasures that are usually included in your monthly budget. You just need to be cautious with where your money is going.
4. Have multiple retirement saving plans besides your 401(k)
Who’s “saving” more for retirement: a $12k worker w/ only Social Security, or $100k worker who maxes out his 401(k)? https://t.co/s9S1QVzrRD
— Andrew G. Biggs (@biggsag) July 6, 2017
Workplace retirement plans like a 401(k) may not be available for some employees. Whether you have or do not have a workplace retirement plan, you can still save for retirement. One effective method is having money automatically transferred from your payroll account to your retirement savings account monthly or every time salary comes in.
If you currently have a 401(k) while saving in a different retirement account, you’ll feel more comfortable with your savings for retirement. Set a meeting with your benefits manager to qualify for a 401(k), if you don’t have one right now.
RELATED: TOP 3 WAYS TO START SAVING FOR RETIREMENT NOW
5. Consider saving in an Individual Retirement Account (IRA)
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Contributing to an IRA is another option you can explore when saving for retirement. Securing one takes you around 15 minutes over the phone. You can also set-up an IRA plan online. You will need to contribute around $458.33 a month to be able to get a full contribution of $5,500 in a year. This amount applies to working individuals under 50-years old.
If you are above 50, your monthly contribution will be around $551.66, with a yearly maximum IRA of $6,500 and a $1,000 catch-up contribution.
6. Stay current on your contributions
Diligently paying for your retirement fund contributions gets you closer to your goal. Deferred payments cause you a few dollars of interest or late payment fees. This amount, when added up and compounded through the years, is quite huge. Imagine putting your late payments fees in a separate savings accounts instead. You’ll be able to appreciate the amount of savings you build if you keep up with your financial obligations.
Keeping up with your other financial contributions, such as your emergency fund, savings account, and insurances, brings you to a better place when you retire.
7. Create several income streams
The fastest way to save for retirement is to have several income streams. You should not be confined by your current income. Finding ways to earn more money on the side is the way to go if you want to build your retirement fund fast.
Make money from a hobby or offer a weekend service. Investing in the stock market, getting mutual funds, selling stuff online, and engaging in a business gives you more money. Any extra amount from a side business or service helps fast track your saving for retirement.
8. Evaluate your insurance policies
Keep in touch with your financial adviser when it comes to your insurances. Always make sure you get the best deals and packages available to you. You’ll be surprised how much you can save if you regularly do your insurance re-assessment.
9. Create a source of income even after retirement
The one thing that makes retirement scary is that your savings, insurances, and pension plans may not be enough for your needs. To eliminate this threat so you can have a stress-free retirement, maintain a source of income even after retirement. This can be a business or an investment where you can cash out a monthly amount so that you aren’t relying entirely on your retirement fund.
RELATED: MAKE EXTRA MONEY IN RETIREMENT
10. Opt for cheaper vacations and holidays
Holidays and vacations are part of your pre-retirement days. You can still enjoy these perks, but try to keep your travel expenses to a minimum. Traveling abroad or locally can cost you a lot, so it would be better to be wise when it comes to splurging on these areas in your life. Better yet, have a separate travel fund to avoid taking money from your retirement savings.
11. Cut down your budget on entertainment
You only live once. However, you do not know what the future may reveal. Enjoy the things you want to enjoy at present, but responsibly stick with your financial plans and goals. Create a balance between enjoying life and preparing for life after retirement. You can still enjoy going to the movies, driving a new car or getting a second mortgage, but remember to put aside enough money for your retirement. It is also advisable to be prepared for unexpected illnesses or accidents that may happen in the future.
12. Access your car requirements
As you get older, you might want to re-assess your car requirements. Do you really need two cars? As your family grows, you’ll see your children leaving home and building a life of their own. As they settle with their own families, you might want to reconsider maintaining two or several cars at home. You’ll see a lot of savings accumulated through the years if you keep a single vehicle.
13. Downsize your home
If you see yourself in a home with three extra rooms that have been left unused for years, getting a new home might be practical. A smaller house comes with smaller maintenance costs. Your electricity, water costs, insurance fees, and mortgage payments are lower, too. However, you can keep your home and all the memories that come with it. The best way to do so is to ensure you are already done paying for your home mortgage or bond payments before you retire.
14. Get better financial services
Your insurances are not the only aspects that need a yearly revisiting. Look around for better rates from other banks that meet your banking needs. Consider asking advice from your financial adviser on how you can generate more savings or get better deals with your current mortgage and loans.
15. Work longer, if not smarter
If you plan to retire by 50, you should reconsider and retire by 55 instead. This is advisable if you are behind on saving for retirement. Retiring early might also drastically affect your everyday life. You might want to strike a deal with your company and offer consultancy services after retirement. You’ll get shorter working hours or you can even work at home. Earn as much as you can to beef up your saving for retirement.
16. Avoid withdrawing from your retirement funds
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— Richard Ehrlich (@SecureWealthPG) July 2, 2017
Your retirement fund should be untouchable. This is the reason why it is advisable to have different types of saving accounts. Religiously put money in your emergency fund, regular savings, investments, travel fund, and other saving accounts. Doing so ensures you’ll have money to use, besides your retirement savings.
17. Payoff loans
Getting out of debt makes it easier to save for retirement. Credit card balances, student loans, personal loans, auto loans, and mortgage debts are just some of the debts that prevent you from saving, in general.
You can get rid of this debt, even while saving, by making lifestyle changes. Getting a high-paying job or earning on the side are some of the ways on how you can get out of debt while saving for retirement.
RELATED: HOW TO SAVE FOR RETIREMENT AND PAY OFF STUDENT LOANS
18. Be in control of your investment and asset locations
Now is the best time to understand your cash flow, investment, and assets. Know where your investments are and how much they earn in a year. Learn how to manage it to make the most out of your investments.
Get rid of assets that cost you money. Extra cars, a yacht, or properties not generating income should be liquidated into cash. You can add this to your retirement reserves or invest it to earn more. Less can sometimes be more.
Have a file of your bank statements, income records, share certificates, and all data related to your financial health. Have them printed regularly and updated on your computer.
19. Keep track of your savings
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— SOLO Expenses (@SoloExpenses) June 5, 2017
As you save for retirement, you should always know how far away or how near you are to your goals. Track your savings in Excel or via finance apps or software from your PC or your mobile phone. Threading blindly or not seeing the bigger picture when it comes to your finances will cost your hard-earned money.
20. Stay healthy
Health is wealth. Exercise, eat right and have regular check-ups. A healthy body helps you become more productive. Being productive can help you increase your assets, not only for the present but most importantly, for the future. Taking care of your health ASAP also saves you thousands of dollars in medical expenses in the future.
21. Live within your means
7 ways to live within your means now so you can enjoy retirement later https://t.co/K3j7YtnTFS
— Jenni Chong (@jennichongCom) July 7, 2017
Enjoy life, but prepare for your life in the future. Going out every weekend may prevent you from hitting your retirement goal in due time. Worse, this may end up getting you into debt. Live a life you can afford so that you can achieve the life you dream of.
Watch this video on how you can practically save for your retirement:
Life is short. You have a very limited amount of years to build a future free from stress and financial worries.
Saving for retirement ensures that you reap and enjoy the last years of your life comfortably without having to be a burden for your family and the society.
Have you successfully saved for your retirement? Share your secrets in our comment section.