A lot of Americans are living paycheck to paycheck. And when you’re struggling to make it by every month, retirement saving is likely the least of your worries. Or, you are worried about it, but it feels like there’s nothing you can do. We want to help! No matter how early or late you start, any form of retirement saving helps. Opening an IRA or 401(k) are common saving options. But what are some practical steps you can take to reduce retirement saving stress?
5 Steps to Reduce Retirement Saving Stress
Start Saving for Retirement Now
No matter your age, if you haven’t started saving for retirement, get started! Even small weekly contributions will make a difference to your bottom line once it’s time to retire. Add a ‘retirement’ section to your budget and evaluate how much you can afford to set aside for your golden years. If you don’t have a budget – start one. There’s no better way to be aware of your income & spending than by using a budget.
Check how much money you currently have saved for retirement. Ask yourself at what age do you want to (or will be able to) retire? Where would you like to retire? Will you downsize? How much money do you need to have a comfortable retirement? Are you almost at your goal, or is a significant amount of saving still required? Set SMART goals to help you make retirement saving more tangible.
Do the Math
If you’re stressed about having enough money in retirement, do the math to figure out the worth of your contributions over time. If you contribute $5,000 every year starting at 25 and ending at 65, you will have invested $150,000. Adding in compound interest, you will have saved roughly $540,700 for your nest egg. From there, make a plan to increase contributions or investment period. Speaking from a mathematical standpoint, the best way to maximize your retirement fund is to start early and make consistent, long term investments. Try some of our retirement calculators to help.
Many employers offer retirement options, making it simple to have money deducted straight through your paycheck and put into retirement savings. See if your job offers an employer match, meaning your employer will match your retirement contributions up to a certain percentage. If they do offer this option, it’s best to maximize the company match. It’s free money! As your income increases, set more aside for retirement.
Update your Saving Strategy
To update your saving strategy, evaluate your 401(k) portfolio and assess the level of risk you are comfortable with for your investment. Depending on your age and how long until you plan to retire, your investment personality may have changed. With less time to retirement, you may want to put contributions into a lower risk fund to ensure your money will stay safe if the market takes a negative turn. If you’re on the younger side, higher risk options may be beneficial as the market has time to rebound from any losses. You may want to speak to a financial planner or advisor to choose the best funds for you and your situation. They may also suggest an IRA, or self-directed savings vehicle, which offers a wider variety of mutual funds than a 401(k), including exchange-traded funds and individual stocks and bonds.
If you struggle to save for retirement due to unsecured credit card debt, ACCC may be able to help. Call 800-769-3571 today to speak to a certified credit counselor.