Saving money for retirement is like going on a diet, most people know what they have to do, but many do not do it properly. We end up making excuses as to why we cannot save for retirement. It could be family responsibilities, low income, even youth is used as an excuse, especially by those under 30.
However, saving for retirement is important. It does not mean that you have to live on canned beans for the rest of your life. You can make small changes that will make a big difference in your retirement savings. Recent statistics show that most middle-class Americans have less than $25,000 saved up for retirement, a far cry from the $250,000 that most experts estimate they will need to maintain their lifestyles in retirement.
Listed below are some of the suggestions that are practical and that you can easily implement to help you boost your retirement savings.
Create a budget
Contrary to popular belief, creating a budget does not mean confining yourself to financial prison. It means creating an economic plan of action that will help you set your priorities and thus help you save. A budget will also help you understand your current spending habits so that you can figure out what you need when you retire.
Start saving early
Most experts agree that the best time to start saving for retirement is in your 20’s, as soon as you start earning. This is a challenge, as most starting salaries barely cover student-loan payments, but this is the easiest way to guarantee retiring comfortably. The more time you have to save the less you have to put aside to get the same result.
Contribute to your employer’s 401 (k) Plan
Current US employment rules require all those earning over $7,475 a year to be allowed to join their company’s 401 (k) plan. The good thing about these plans is that your employer contributes as well, making it easier for you to save.
You do not have to rely on your employer’s scheme though; you could always open an individual retirement account with a low-cost brokerage firm. Just like your 401 (k), these plans allow for automated payments, so you do not have to keep on writing a monthly check.
Deal with your debt
Credit card debt is one of the biggest obstacles when it comes to saving for retirement, but it is also one of the easiest things to handle. For a start, do not make minimum payments on your cards, instead, double or triple the minimum payments to avoid accumulating debt. Also, try to get the best interest rate you can on your card. Finally, avoid using your credit cards. If you are one of those people that cannot help but swipe when you get to the till, leave your card at home and carry cash. Spending actual paper money will help you realize how much you are spending and help you cut down on unnecessary purchases.