Save 5% of your income each year
Half of American workers say they don’t save—or don’t save more—for retirement because of their current expenses, according to the 2015 Employee Benefit Research Institute Retirement Confidence Survey. Fifty-seven percent have saved less than a total of $25,000. But, it’s easy to put just a little aside—and it makes a big difference! Saving 5 percent of your salary if you earn, say, $100,000, is just $5,000 a year, but it can mean almost $213,000 in just 20 years. Here’s how to come up with the extra cash to put away:
Adjust your mindset. Coming up with a few hundred dollars to put away each month may seem like a nightmare, but making small lifestyle changes can yield huge results without too much sacrifice.
Cut back. Some money-saving tips are painless—like canceling unused memberships, brewing your own coffee instead of buying, and borrowing books from the library instead of splurging on a new one every few weeks. A canceled gym membership alone could net you 10 percent of the money you need to save each month.
Pay less. Bundling services such as cable, Internet, and phone could save you an easy $50 or so each month to put toward your retirement savings. Buying store brands instead of name brands could mean an additional $30 a week, according to one study. And shopping around for other services like auto repairs or big purchases could help you come up with additional savings, too.
Adjust withholdings. Get a large tax return every year? If you’re not counting on that money for another expense when April rolls around, you can adjust your withholdings now and use that money monthly to boost your retirement savings. The average tax return is just over $3,000, according to the IRS. That’s $250 to stash each month.
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