When it comes to saving for retirement, I don’t know anyone that is actually “comfortable” with the amount they have saved. It’s usually because they haven’t saved nearly as much as they wanted to. But even in cases where they have a lot of savings, it’s hard to feel comfortable when you don’t really know what to expect during retirement. Just like big costs come up during non-retired life, they will surely come up later in life, maybe even moreso. And after watching our retirement accounts plunge during the big selloffs in the stock market the past ten years, it’s easy to lose confidence in your retirement plan.
There is only way to get “comfortable”. It’s to save a lot of money. The more money you save, the more likely you’ll be able to make it through retirement.
But what can help you save for retirement? After all, sometimes it feels pointless right? Here are a few ways to help you stay motivated and on track.
Make Saving a Priority
Literally, you have to put saving money ahead of other things. Even things you think are important. For example, you should not stop contributing your retirement savings account to help fund your child or children’s education. If you can’t afford to do both, you should always choose retirement. You can help them get loans if they need them, and if you’ve done well later in life you can always choose to help them pay the loans back.
Also, you must make saving for retirment habitual. Make sure that at least ten percent of your money goes directly to savings. Whether it goes to your company’s 401K, to a self funded Roth IRA, or even to a regular savings or investment account, you need to make sure that you save as much as you can each month. If you get the urge to put off savings to spend money on something else, you should reverse the roles and put off the something else until you can afford to do it without comprimising your savings.
Don’t Make Excuses
When it comes to saving, it’s really easy to make up excuses and spend money instead of save it. I’ve seen it a million times. I’ve even done it myself quite often. The thought process goes something like. I want a new car. Then, you start justifying it by saying your old car is expensive to maintain and doesn’t get as good of mileage as the new car. Then you say, I need the new car. And that often turns into, let’s make payments on the new car instead of saving the money. This is a rather simplistic example, but people’s minds work in a similar way. They often try to justify spending money on things at the cost of saving that money. Be cognizant of your thinking and don’t make any excuses for yourself. Save the money you need to reach retirement. That new car isn’t going to pay for your healthcare during retirement.
Change Your Lifestyle if You Need To
If you absolutely feel that you can’t afford to save any money, then you need to make some changes. Lifestyle changes are the best way to save more money. Even if you are already saving some of your earnings, you should still consider making some changes to save even more. The best way to start is to do a little research about frugality. Frugality is a way to save money by using less resources and finding lower cost alternatives. It employs reusing old products, buying lots of used items, and being conscious of your waste. You don’t need to go to extremes, but employing frugality even in small doses can make a difference. You don’t need to live a minimalist life, but just choosing your purchases more wisely is a good start.
For many of us, frugality sometimes just isn’t enough. In these cases, you have to start working toward longer term fixes. Trying to raise your income is a good approach. You can work toward a degree or use advanced schooling to help raise your income. You could also look for a second job or freelance on the side. Additionally, you should look to lower your large ticket expenses over the long term. Consider moving to a lower cost area or a smaller house or apartment. The savings are more than just your rent or mortgage, they include reduced taxes, utilitiies and maintenance, which are often enough to get your retirement savings back on track. Consider driving older cars and buying used cars. There are lots of ways to lower your monthly fixed costs, but many of them take a while so stay motivated and keep trying.
What Others Are Saying About Saving For Retirement
We like to look around the web and see what other blogs and websites are saying about the same topic. For example, here is a small part of a large article from Good Housekeeping. They had the following retirement advice to give:
You can’t take out loans for your golden years, so how you save now really matters:
- Don’t cut back on retirement savings in hopes of providing your kids with a full ride to college. Aim to save enough in a 529 plan to cover about half your expected college costs.
- And don’t speed up repayment of your own student debt. Look into consolidating your loans to stretch out the payments if that frees up the money you need for a 401(k).
- If you’re young or middle-aged, don’t increase your mortgage payments at the expense of your nest egg.
- Don’t stuff all your spare cash in your 401(k). Contribute as much as is needed to get your company’s full match. A good option for some extra savings (if you have any) is a Roth IRA.
Read the rest of this article at Managing Money Tips – How to Manage Your Money – Good Housekeeping.
Even the IRs gives advice on how to “take responsibility for your retirement”. Here is an excerpt from their website:
Set a Goal – “I think I can save $25 a paycheck.” It’s easy to procrastinate so set up a “painless” payroll deduction for saving. It doesn’t matter if the money goes into a 401(k) plan, an IRA or into a plain, old-fashioned savings account, just start saving. You can start with a small amount and increase it whenever your circumstances allow – like when you get a raise, your car payments end or you get a bonus. Pay yourself now, you’ll thank yourself later.
Estimate Your Social Security Benefits – The Social Security Administration offers a calculator to help you estimate your future Social Security benefits. For more information, go to www.ssa.gov.
You can find the rest of this article at http://www.irs.gov/retirement/participant/article/0,,id=133069,00.html.
Indeed, there are ways out there to increase your retirement savings. You just need to find what works for you. Create a retirement budget and make the necessary lifestyle changes that can put you back on track to retire when you want to, not when you can afford to.
What helps you save for retirement? Let us know by commenting below.