Retirement…it’s funny how many of us don’t think about this until we’re in our mid 30’s to late 40’s. We’re so busy trying to stay afloat and maintain on the daily basis, that saving for something that is 30 to 40 years off seems unimportant. That is, until our children are in high school and we’re looking forward to walking away from our jobs.
The truth is that approximately 36% of the US population does not have a retirement savings plan in place. While the reasons for putting off or not saving at all can seem logical, the truth is, if you don’t save, you could find yourself working well into your 60’s or living on a very small income.
Your retirement years are supposed to be enjoyable. You’ve worked X amount of years, have taken care of a family, and now deserve to be able to kick your feet up and enjoy what life has to offer. Whether you decide to take several vacations or spend much needed time with your friends and family, you should be able to do so without having to worry about how you will afford it. Therefore, the sooner you begin your savings efforts for retirement, the better off you’ll be.
Knowing What to Save
Many individuals have no idea how much they should save for retirement. The truth is, the number will vary. The amount you save will depend upon the various bills you’ll have to take care of, the amount of social security and other retirement funds (pension, 401K, or IRA) and the type of lifestyle you wish to lead during retirement. CNN Money advises that you save at least 10 to 20% of your income (starting in your 20’s) to go towards retirement. If you can’t afford that at the moment, then you’ll need to figure out ways to cut back so that you can begin to increase your savings.
Below are a few suggestions:
- Learn to live on a budget – Budgeting believe it or not is a great way to increase your retirement savings. A well planned budget can keep you from spending money unnecessarily. Budgeting now is also ideal for those nearing retirement as it gives you an idea of how to manage your money when you’re on a fixed income. If you don’t already have one, consider working out a household budget and sticking to it so that you can put any leftover funds into retirement savings.
- Consolidating or Eliminating Debt – If you’re really drowning in debt and can’t seem to stay afloat, then the first thing you need to do is get yourself out of debt. There are several ways you can go about getting out of debt, including negotiating on your own, going to a debt consolidation service, or even obtaining a loan to pay off all your debts (self consolidation of sorts). For those who are already in retirement age but looking for a way to eat away at their home finance debt, you might consider looking at reverse mortgages information. Reverse mortgages can be offered to those 65 and older who have equity in their home. You could use this money to pay off your debts so that you can live on a fixed income without worrying about bill collectors.
- Cut Back on Impulsive Spending – This may be easier said than done, however, if you’re going to start increasing your retirement savings, you’re going to need to cut back on the impulsive spending habits. Spending unnecessarily can easily throw you off budget and keep you from saving as you should. Therefore, the best advice I can give you here is when you want to purchase something that will cost you more than you budgeted for, stop, think about it for 24 hours, and then if you still feel you need it, purchase it the next day. This way, you’ve had a chance to see how the purchase will affect your finances.
Saving for retirement doesn’t always have to be about finding ways to increase your income. A lot of times we are able to save without difficulties if we just learn to live within our means. Living without a budget, with extreme amounts of debt or impulsively shopping can all result in a significant decrease in our monthly income. If you can begin by managing the above three areas of your finances, you will find that this frees up your money to save for your future.