Getting a late start on your retirement is far from unusual. According to a recent poll, 58 percent of Americans 55 and older have less than $100,000 saved for retirement, while 26 percent of Americans ages 50 to 64 have nothing saved.
Although these numbers are daunting, there is still hope that retirement is possible even if you’re late to the party. So pick your head up, get to work, and start using these easy ways to jumpstart your retirement.
If you’re in the final years of your career and haven't started, you should start right now. And by now, we mean as soon as you’re done reading this article.
The first thing many people suggest is to start saving a portion of your income every payday. No less than 10 percent of your take-home should go to a retirement savings account. Most employers offer a 401k or another type of retirement savings plan. If you are not contributing to some kind of retirement account, this should be the first thing you do. If your employer does not offer a 401k, there are several low-cost brokerage firms that will provide automatic contributions to private retirement plans like Independent Retirement Accounts (or IRAs).
The best (and probably most important) part is that a vast majority of these accounts will take your contribution automatically from your paycheck, allowing the more undisciplined or forgetful among us to start saving without having to do a thing.
Out of sight, out of mind. You can’t miss money you never had. Getting started is crucial but once you begin, it’s a lot easier to keep going.
Put Away Windfalls
Get a raise? A bonus? Decent tax refund? That’s great news! Now pretend like it never happened.
The temptation for most people who find themselves fortuitously coming across some extra money is to raise their lifestyle costs accordingly. But if you’re nearing retirement age, you can’t afford to not put away those extra earnings towards your retirement.
The earlier and more aggressively you start putting away chunks of money, the higher the potential is for compound interest. The interest from your contributions starts to accumulate their own interest, which for early retirement savers comprises a significant boost to their income in their golden years. The more you put away now, the higher the potential is for that money to grow exponentially.
Downsize Your Home and Lifestyle
While a five-bedroom house is great for when the kids come to visit, it’s an unnecessary expense and can provide one of the crucial windfalls that can be earning you money for retirement. Your kids will be fine on the couch during visits. Promise.
If you’re in a position to sell your home, the federal government will allow you to keep the first $500,000 in profit tax free if you’re a couple and $250,000 if you’re single.
We’ve talked a lot about how active adults and retirees are drawn to “rightsizing,” choosing a home that reflects their stage in life and their needs. Without the extra (and unnecessary) square footage, you find that your monthly expenses decrease as well as your time commitment keeping the home in order, giving you more time to do as you please and more cash to stash away.
Thus far we have talked about saving on a larger scale, but there are also everyday habits we can incorporate in order to save smaller sums of money. If humans really are “walking routines,” then taking a good look at your everyday habits can be crucial to making the small sacrifices needed in order to ensure a more comfortable retirement. If you’re 40 and are craving a $5.00 side of chips and guacamole, by the time you’re 80 that money could grow into more than $1,000. Still hungry?
Find a Second Job
This is a hard pill to swallow, as most people don’t particularly enjoy the thought of working outside of their designated career path. But having extra income is very important when it comes to acquiring the small amounts of money needed to compound your nest egg.
The best part? This can be whatever you want it to be. Sell handmade jewelry, become a freelance writer, build birdhouses, or consult. Whatever your passion, there is most likely a way to monetize it. It’s also a great way to keep money coming in once you do retire, income that could make the difference between a comfortable retirement and one that requires a serious downgrade in lifestyle.
The other major benefit to finding secondary income is that, once you do reach retirement, you will have a hobby that keeps you mentally engaged, making it easier to find others who share your passion. Not only does it help relieve the financial pressures of living on a fixed income, it also keeps you socially active.
What are your ideas about how to give your retirement savings a boost? How are you preparing, or, are you preparing to maximize your retirement earnings? Let us know in the comments section below.