They say saving for retirement is simple. All it takes is saving 15 percent of your income starting in your 20s in order to retire comfortably at age 65. Obviously, “simple” doesn’t necessarily mean “easy.”
Study after study tells us that most Americans are not saving enough for retirement. Unfortunately, many people aren’t saving at all. We know that retirement is heading our way, yet we can’t seem to translate the simplicity of retirement savings into action.
There are undoubtedly many reasons for our collective inaction. Chief among them is a lack, or a perceived lack, of money. The fact is, debt, and not retirement is the biggest financial worry, so there just isn’t enough money to start saving for retirement. In a survey, over 55% of women, and 51% of men were willing to admit they were “overwhelmed” with debt. In other words, saving money is hard. Here are some suggestions to help make retirement savings a little less painful:
Start saving part of a raise. How about increasing the amount you save with each pay raise. If you save 100 percent of your pay raise, take-home pay will still rise if the savings goes into a tax-deferred account. Saving less than the full pay raise allows for an increase in retirement savings while further increasing after-tax income at the same time.
Increase savings after debt repayment. It’s a great feeling to pay off debt. That’s particularly true with credit card debt, which often comes with double-digit interest rates. The problem is that it’s easy to spend the extra money that comes with paying off debt without knowing where the money goes. It somehow just vanishes into our monthly budgets. Avoid this disappearing act by increasing retirement contributions by the amount of your former debt payment.
Lower your bills and funnel the savings to retirement. This approach has a double benefit. First, lower the cost of a monthly bill. Then use the savings to increase retirement contributions. It’s far easier to reduce the cost of monthly bills than you might think. From getting car insurance quotes each year to rethinking the hundreds of dollars many people spend on cable, Internet and cell phone plans, saving an extra $100 or more each month can go a long way in retirement.
Save one-time gifts, bonuses and tax refunds. Periodic windfalls represent a golden opportunity to pad a nest egg. Because this money is typically not included in your monthly budget, it is often spent on wants, not needs. The next time you receive a financial gift, or earn a bonus or receive a refund, consider putting at least some of the windfall into your retirement account.
Savings Membership. This is a savings strategy for saving money on the items you’re going to purchase anyway. Here’s how it works. You keep on buying the items you purchase anyway, whether its the items you purchase frequently, like personal items, or paper products, or the larger items like automobiles, furniture, or jewelry, from the retailers you are already purchasing from, but here’s the difference, you will save money because using this strategy, the retailer will pays you a commission just for buying from them with this savings program. And in case you are wondering, you continue shopping with the same stores you’re probably already doing business with.
Save at your favorite retailers like Wal-Mart, Target, Home Depot, Kmart, or Sears. Actually, I could go on and on since there are currently over 300 participating retailers and that number continues to grow. Buy an item from one of these participating retailers and that retailer will pay you a commission check.
Saving money may not be easy, but it doesn’t have to be painful, when you use these strategies discussed.
The author, Gary Price is an attorney specializing in intellectual property matters including patents, trademarks and copyrights and professional internet marketing coach who helps families build full time home businesses on the internet quickly and affordably.