Saving for retirement can be a chore, and when your wallet is stretched in several different directions with other financial responsibilities, it’s easy for saving to get pushed to the bottom of your priority list.
But if you want the best chance at retiring comfortably, it’s crucial to start putting away money now. The average worker estimates that retirement will cost around $1.7 million, according to a survey from Charles Schwab. That’s a hefty chunk of cash, and you’ll need to kick your savings into overdrive to land anywhere near that goal.
If you’re strapped for cash and don’t have much to sock away now, it may feel impossible to boost your savings. These three techniques, though, can help you supercharge your savings with minimal effort.
1. Set up automatic retirement fund contributions
One of the most difficult parts of saving is simply finding the willpower to not spend your money. You’re likely facing constant temptations to spend every day, whether it’s buying lunch at a restaurant, splurging on a new pair of shoes, or treating yourself to a pricey cup of coffee.
While you don’t necessarily have to give up all these expenses, it is important to balance spending and saving. And one easy way to force yourself to save more is to set up automatic retirement fund contributions.
If you have access to a 401(k) through your employer, you can probably transfer a portion of each paycheck straight into your retirement account. That way, the money never makes it to your bank account in the first place, reducing the urge to spend it. If you have an IRA, you can also set up automatic transfers from your bank account to your retirement account every week, month, or however often you choose.
Automatic contributions not only make it easier to save consistently, but they can also help you build saving into your budget. Rather than waiting until the end of the month to put aside whatever scraps you have leftover, you can make saving a top priority.
2. Contribute a set percentage of your salary
There’s nothing wrong with saving a set dollar amount every week or month, but if that’s your strategy, your income will likely continue to grow while your savings stay stagnant. If you’re using automatic contributions, it’s easy to set aside a certain dollar amount each month and forget about it for years.
While that is certainly better than not saving at all, you might be missing out on the opportunity to effortlessly increase your savings rate. When you designate a set percentage of your salary — versus a set dollar amount — your savings will automatically increase with every raise or bonus you receive. Your income will increase at least a little year over year, and when the amount you’re saving increases along with it, that can dramatically grow your retirement fund over a few decades.
So just how much of your salary should you be saving? The most commonly cited guideline is to try to stash away around 10% to 15% of your annual income, although that number may be higher if you don’t have much saved and are nearing retirement age. Regardless of what percentage of your income you choose to save, consistency is key. Try your best to set aside the same percentage of your salary month after month. Then if you can swing it, you may decide to increase the percentage you’re saving to give your retirement fund an even bigger boost.
3. Contribute enough to earn the full 401(k) employer match
Matching 401(k) contributions from your employer are essentially free money, and they can potentially double your overall savings. So if your employer offers matching contributions, it’s smart to take full advantage of them.
Besides earning free money, another reason to save at least enough to receive the full match is that it can help motivate you to continue saving even when you don’t have much cash to spare. Most employers offering these contributions will match around 3% to 6% of your salary, so if you can’t afford to save 10% to 15% of your income, at least aim to earn the full match. Saving 3% of your salary may only amount to a few dollars per week, but when that money is matched, it doubles your savings at no extra cost to you.
Saving for retirement likely isn’t the most exciting thing to do with your cash, but it is essential if you want to enjoy your later years comfortably. If money is tight, you’ll need to be strategic about how you save. And these smart saving techniques can build a healthier retirement fund and create a more financially secure future.
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