Don’t Wait Until You’re Older. Start Saving For Retirement Now

saving for retirement

Saving for retirement is so stressful when you feel like it’s all you can do to make it to the next paycheck. With more than half the American public feeling like they’re behind on their retirement planning, that’s a lot of stressing out! 

In the following article, we’re going to address what you can do to turn the tide. But first, let’s look at the obstacles that are keeping you from it.

Why You’re Not Saving

Saving is easy once you get started doing it. But it can be very difficult taking the first step. This is usually due to us believing certain falsehoods we’re about to get into, but also could be due to some seemingly legitimate reasons.

Not Enough Income

Living paycheck to paycheck is an unfortunate reality for millions of people. If it’s all gone by the time the next check comes around, how could you possibly find enough wiggle room to put back for your retirement?

Failing to Track Your Spending

Some families don’t make enough money. That’s indisputable. But a large number of us also spend more than we intend to by failing to scrutinize the things we’re buying with meaningful detail. 

Convincing Yourself You Cannot Afford It

Sometimes you can afford more than you think but you’re so downtrodden from the feeling of not getting ahead that you fail to realize the opportunities. We’re going to say something crazy here, but it’s true. You can always afford to save something.

Spending Therapy

This is one a lot of us have been guilty of. We’re so dejected by the lack of extra money each pay period that we get fed up with never having the chance to enjoy life and end up spending more than we should, thanks to weak sales resistance, a lack of willpower, and a little plastic.

Now you know the behaviors and situations that are causing the drama. It’s time that we looked at some solutions for what to do about it. Follow as many of these as you can, and you’ll have a retirement account before you know it.

1. Design the Lifestyle You Want

Before considering a savings account or any other financial instrument, get your goals in order. Don’t obsess over the harsh reality. Picture where you want to be.

What is a realistic lifestyle you would like to have if you were to ever pay your way out of debt? What does fiscally responsible behavior look like and how does it balance with what you like to buy or do? 

2. Assess Where You Are

Still not quite ready for the retirement account. Instead, it’s time to assess where you are. And we mean where you truly are.

Go over your ongoing expenses with a fine-toothed comb. Account for every dollar you make. Compare the two to see how much discretionary income you have (or how much more you’ll need to earn). 

3. Start Small

The smart saving habits have nothing to do with volume. Few people ever get rich overnight. They do it by incremental savings over time, thanks in part to the concept of compounding interest.

Enjoying any of that, however, requires that you save something, even if it’s just one percent of what you make. Get comfortable saving before upping the ante.

4. Know When to Get More Aggressive

Another important thing to learn when investing money wisely is that there will come a time when you can and should be more aggressive. Many analysts suggest taking the risk on more volatile investments (like emerging markets) when you’re in your 20s, for instance. Then, work in more conservative investments the closer you get to retirement.

That’s ideal. But it may not be for everyone. People who start late and are trying to catch up to their retirement number, namely. 

The point: there’s a time to be aggressive and a time to be conservative in your investment decisions. Learn when those times are for you.

5. Choose the Right Financial Instruments

There are many retirement accounts and investment options to choose from. Employees often have the option of saving pre-tax dollars through a 401k. Self-employed individuals prefer the Roth IRA, which can be withdrawn at retirement tax-free.

You also might consider round-up accounts that go up to the nearest whole dollar and are tied to your debit card transactions. For every purchase you make, whatever change gets you to the next whole dollar goes into an investment portfolio.

6. Target the Amount You Will Need to Retire Comfortably

Use a retirement calculator to gauge how much money you’re going to need for retirement. From there, play with the numbers to see how aggressive you need to be in your savings for where you are at this moment in life.

7. Make More Money

Easier said than done, right? Not necessarily. The Internet has opened up a plethora of ways we can use our existing talents to make extra money on the side.

If you do start a side gig, however, make sure you hold out 30 percent for tax purposes. That’s considered self-employment money, so you won’t have an employer to pay half of your Social Security and Medicaid costs.

8. Cut Unnecessary Expenses

Are there any entertainment subscriptions you can live without? What about meals and coffees out?

Scrutinizing your spending will highlight opportunities to reduce your output. It won’t solve all your problems, but it will free up some money to go into a retirement account.

9. Capitalize on Your Benefit Offerings

This isn’t for everyone. But if you do work with an employer that offers a 401k with matching, take advantage of it. That’s like getting double for each contribution you make, up to three or five percent anyway.

10. Invest in Life Insurance

We recommend this because a) some life insurance builds cash value that can be withdrawn or borrowed against, and b) it will leave your family with options in the event something happens to you and you haven’t saved any money for retirement or unexpected expenses.

Yes, insurance is an ongoing expense. But it also provides you with enough peace of mind to not be discouraged when your retirement planning falls behind.

11. Enjoy Your Money When You Can

You can’t take it with you, and you’re only young once. Take advantage of a healthy mind and body by finding some room to enjoy your money when you can. Do it without feeling guilty, too.

Saving for Retirement Doesn’t Have to Be a Chore

Saving for retirement can be gratifying when you see those small contributions start to add up. Whatever you do, don’t be discouraged by a lack of progress. Start saving whatever you can now, and you won’t regret it.

Good luck! And if you’d like any help with retirement questions or other financial advice, try our Letters to the Editor feature today.

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