Are you eager to start saving money for retirement? It’s never too early — or too late — to make this a priority. After all, you want to build a nest egg that will afford you financial security once you punch the clock for the last time.
Since you can’t rely on Social Security benefits to finance your retirement in full, it’s smart to take action now and find other ways to save. Keep reading to learn 7 tips on how you can build your retirement savings!
1. Use Your Workplace’s 401(k) Plan
If you work somewhere with a retirement plan — normally called a 401(k) at most workplaces — make sure that you are participating in it.
Many companies will offer to match retirement contributions up to a certain amount. For example, a company with a 4% match would match your 4% contribution. This is an easy way to build money in your retirement account, and most places let you do an automatic payroll deduction.
You can contribute from your income beyond the match rate up to a certain amount that varies by year. But when you hit the age of 50, the cap on what you can contribute to your retirement fund goes up — so start stashing more money!
2. Invest Wisely
If your workplace doesn’t have a retirement plan or even if it does, you’d be wise to put some of your savings into safe investments. There are different schools of thought on what the best way to go is, but mutual funds are a safe bet.
There are many brokerage services online where you can set up a free account, transfer money from your bank, and begin investing. Do some research first to know the lingo of investing, but know that you’ll want to have a blend of equities (stocks) and bonds. If stocks plummet one day, the bonds will help neutralize the deficit.
Consider what level of aggressiveness you are comfortable with regarding investing, and talk to a professional when you plan for retirement. Be sure to check what fees are associated with trades and certain types of investments, too.
Compound interest is the key to building your nest egg through investing. Simply put, it’s the interest that you gain from existing interest. What this means is that over time, your money can grow much faster through investments than it can sitting in a savings account.
3. Saving Money For Retirement Involves Maintaining a Budget
If you can learn to control your spending habits, that frees up more money to put into investment accounts. How do you do this? By setting a budget.
Allow yourself some fun money, but try to limit how many times you eat out or go to the movies each month. Learn to cook or join an online movie platform as cost-saving measures.
Go camping rather than staying at a resort, or buy the used car instead of the fancier new one. And make concessions the next month if you know that you overspent during the previous month.
4. Pay Off Debt
If you have credit card or student loan debts, try to pay them off as soon as possible. With most loans, you accrue interest, and this interest adds up to higher and longer payments. Loan debt can get out of control quickly if you let it linger.
The last thing you want is for these debts to hang over your head as you move toward retirement. So build in some bigger payments when you can to squash debt sooner.
5. Set Monthly Goals For Saving
Most experts agree that you should stash away about 20% of your income for retirement. That percentage might not sound doable for you at some points in your life, and that’s okay. Start by saving a little each month and grow that amount over time.
Maybe begin with 5% or even 10% contributions. With some small changes to your expenses, you can make this happen. And during months when you can save more, do it!
6. Work More When You Can
Can you grab a few more hours at work each week? Do it.
Can you push off retirement another year or two? Do it.
If you can find ways to work a little harder now, that means more money for retirement later. Another option is to find a side hustle, or second part-time gig that generates extra cash for your retirement funds.
Consider babysitting, selling excess items online, taking academic surveys, doing a ride-share service, or finding another means or padding your monthly income. You might even have a spare room that you could rent out to people for overnight visits if you live in a desirable location. Your future self will thank you!
7. Plan With Your Significant Other
If you have a significant other in your life, make sure that you do this planning with them. It’s really important that you’re on the same page and working toward the same goals. Know your priorities, and what sort of quality of life you will expect when you hit retirement age.
Finances can be a divisive aspect of relationships, so make sure that looking over expenses is a shared responsibility. Work together to modify your spending habits and increase your savings. And when in doubt, ask for help.
Start Saving Now
Saving money for retirement may sound like a stressful experience, but it doesn’t have to be. If you make a plan, reach out to the people you trust for guidance, and start now, you can reach your retirement goals.
When you’re ready to learn more ways to improve your work-life balance, check back with us for more great articles!
