Without looking, can you guess how much you have in your savings account? Is it enough to retire? Unfortunately, many people don’t start saving for retirement until it’s too late.
Many Americans who are saving for retirement unfortunately aren’t saving enough. Neglecting your retirement planning now could affect your quality of life later.
Before that happens, read on to discover how to save money. With these smart money tactics, you can even turbocharge your account with investments. Start using these smart money tips and save!
1. Establish a Goal
If you want to turn your retirement planning goals into a reality, start now. The longer you wait, the less money you’ll save! Establish a SMART goal, which is:
- Specific
- Measurable
- Attainable
- Relevant
- Timely
For example, you can save $1,000 each month by saving a third of your income and picking up a side hustle. Consider establishing more than one financial goal. About 41% of adults want to focus on financial basics, with emergency savings being a top priority.
The most common financial goals include:
- Gathering emergency funds (46%)
- Retiring at a desired age (38%)
- Paying off credit card debt (37%)
Beginning now will allow you to leverage compound interest. Your assets will generate earnings, which you can reinvest to generate even more.
A 25-year-old who invests $75 a month will accumulate more assets by age 65 than if they start saving $100 at age 35. You can invest a small amount over a longer period to generate better results!
When saving for retirement, picture your golden years. Do you want to find a retirement home in Florida? Maybe you want to travel the world.
Your unique retirement dreams will determine how much you’ll need to save for retirement. Use an investment calculator to determine how much you’ll need to save.
2. Invest 15%
Start investing 15% of your income into a tax-advantaged account. For example, you can get the 401(k) match if your employer offers a traditional 401(k). They’ll match your contributions, giving you the chance to gain free money.
Determine if your company offers a Roth 401(k). As long as you have good mutual fund options, you can invest the whole 15%.
You can also work with a financial advisor to open a Roth IRA. A Roth IRA is a retirement savings account. It allows you to pay taxes on the money you put into it up front.
The growth of your Roth IRA and any withdrawals you make after age 59.5 are tax-free. Make sure to spread your investments evenly within your 401(k) and IRA. The four types of growth stock mutual funds are:
- International
- Growth and income
- Growth
- Aggressive growth
You can find the average 401(k) balance by age here. Don’t forget to talk to your financial advisor. They can help you find funds that have strong track records over a period of time.
3. Max Your 401(k)
When you’re ready, try investing more than 15% into your retirement savings. First, max out your 401(k) and tax-favored investment options. You can also open a taxable investment account.
Remember, you usually can’t take money out of your 401(k) or IRA before age 59.5 without facing early withdrawal penalties. You can get around this by opening a taxable investment account. With this option, you’ll have to pay taxes on any money the account earns.
4. Cut Your Cost of Living
Once you’ve applied the above tips for maximizing your retirement savings, take a look at your current expenses. Establish a monthly budget for yourself. Setting and sticking to a budget will help you cut down your cost of living.
Determine how much you’re spending each month on:
- Food
- Utilities
- Shelter
- Transportation
Establish a monthly budget for each category. Any money you don’t spend, you can add to your savings!
5. Stop Overspending
Stop spending money on non-essentials. Review your monthly expenses to determine where you can stop spending money. For example, you can stop going to the movies and spending on subscription services.
Instead of getting takeout each week, establish a weekly menu. Cooking at home is one of the best ways to save money long-term. These small changes to your spending habits can help you add more to your retirement fund!
How much do you have in your savings account at the moment? Only 64% of Americans have enough money on hand to cover a $400 emergency. In fact, about 60% of American adults live paycheck to paycheck.
Adults ages 65 to 74 have a median of $8,000 in savings; not enough to retire on. Start making adjustments to your spending habits now, long before you reach retirement age.
6. Get Rid of Debt
Get rid of any debts you have as soon as possible. Americans who are in debt have the most difficult time saving for retirement.
You can knock down your debt using the snowball method. List your debts from smallest to largest interest rate. Then, make the minimum payments on every debt except the smallest.
For the smallest debt, pay as much as you can. Repeat this process until each debt is paid in full.
7. Check Your Insurance
Reach out to an independent insurance agent if it’s been a while since you last reviewed your insurance policies. Try to find a better deal on your car or homeowner’s insurance.
You could find hundreds of dollars in savings by adjusting your policies.
8. Find Side Gigs
Once you start using these smart money tips, try to find more ways to add money to your savings account. For example, you can start picking up side hustles. A few include:
- Monetizing a YouTube channel
- Becoming a rideshare driver
- Pet sitting
- Dog walking
- Starting a podcast
- Designing your own t-shirt
A few side hustles can add hundreds to your savings account each month.
9. Delay Social Security
Every year you delay receiving a Social Security payment before age 70 allows you to increase the amount you receive later. Consider delaying your Social Security payments. The monthly benefit will increase, allowing you to save more for your retirement.
Apply These Smart Money Tactics Today
Don’t leave your savings account full of cobwebs when it’s time to retire. Instead, use these smart money tactics to start saving. With these tips, you can stay on track for retirement.
You can even ensure a better quality of life in your golden years! Start saving today.
Searching for more tips? Explore our latest articles for more smart saving advice.
