According to the 2018 Survey of Confidence in Retirement, only 64% of US workers saved for retirement, and 47% saved less than $ 25,000, according to the survey of the previous year. It is clear that most of us have much more savings to do to avoid spending our last decades in difficult conditions.
Saving enough for retirement is easier said than done. There are always a lot of demands on our limited funds. So, here are seven ways to save more money. See how much you can put into practice.
Tip # 1: Get – and stay – out of debt
It is hard to save a lot of money if you are heavily indebted and you are spending thousands of dollars annually in interest. Some debts, such as low-interest mortgages, are not a problem, but high-interest loans, such as credit cards, can hurt your financial health.
Imagine that you owe $ 25,000 on your credit cards, as many people do. If a typical 20% interest is charged, you will have to shell out more than $ 5,000 a year for nothing! Raising $ 5,000 a year in a retirement account with average annual growth of 8% would be about a quarter of a million dollars over 20 years. That's what you lose if you are in debt without wanting to fend for yourself. Getting out of debt is not always easy, but it can be done, it is very satisfying to do, and this will give a powerful boost to your financial health.
Tip # 2: Automate your savings
This strategy is easy enough. Your employer may let you transfer a specific amount directly from your paycheque for each pay period into one or more bank accounts. For example, you could have $ 400 sent to a savings account each pay period, saving about $ 10,000 each year.
Enjoying automation with a 401 (k) account at the workplace is also effective. The predefined amounts will automatically be transferred from your paycheck to your retirement savings account. Many companies automatically sign up for their 401 (k) program, but set your contribution percentage rather low. Increase your contribution in order to get a significant percentage, between 10% and 15% minimum, then try to increase this percentage each year. (Do not assume that 10% is enough.For many people this is not the case – in particular, their savings are less than what they should be.) If your employer offers a match, this strategy will bring even more.
Also be sure to invest this money effectively, reminding yourself that long-term dollars are likely to grow faster in stocks. Consider an inexpensive broad-based index fund, such as the SPDR S & P 500 ETF (SPY), Vanguard Total Stock Market ETF (VTI), or Vanguard ETF Total World Stock (VERMONT).
Tip # 3: Earn a portion of all your tax increases and refunds
It's a pleasure to receive regular increases at work and get a tax refund check every year from Uncle Sam, but do not waste that money on treats and do not keep it in your bank account, where it could be spent accidentally. Instead, direct these funds directly into your retirement savings.
You may not be able to save each increase for decades, but try to save as much money as possible. You will live below your means and your financial health will increase.
Tip # 4: Be – and stay – healthy
This tip may not seem financially related, but it is: Being healthy and staying it means that you will probably spend less on health care in your life. This can represent a lot of dollars.
A 65-year-old who retires in 2019 will spend an average of $ 285,000 on health care, according to Fidelity. There is no guarantee, but you will be more likely to spend less on health care if you take care of yourself.
Tip # 5: Take a side concert
That's right – find another job. It may not look attractive, but it does not have to be terrible. Think about the types of things you are good at and the things you like. You could earn a little more money while driving for a carpool company some evenings or weekends, or you could get your money's worth by doing tutoring, editing, coaching, consulting, strolling or keeping pets, gardening, organizing, cooking, catering or renting a room from Airbnb.
A good concert can bring you $ 1,000 or more a month. Even if you simply work as a cashier and earn $ 10 an hour for 10 hours a week, you will earn about $ 5,000 more per year and you can save in your retirement account so that your account grow.
Tip # 6: Use rewarding credit cards
If you regularly use a credit card, be sure to use the type of card that serves you best. If you still pay your debts, focus on balance transfer cards or low interest cards. But if you are in good financial health, choose cards with rewards and / or cash back.
Some cards offer between 1% and 2% off each purchase, and some pay up to 5% or 6% off some purchases, such as those from supermarkets or some retailers. If you spend $ 500 a month at Amazon.com and its subsidiary Whole Foods Market, you can earn 5% on most purchases, which saves you $ 250 a year. If you travel a lot, your best choice might be a card offering travel rewards and discounts.
Do not use this advice if you are facing credit card debts or if you are not disciplined enough to charge only what you can afford with credit cards. If you are in debt, focus on repaying your debt, perhaps with the help of a 0% APR introductory card or a balance transfer card. .
Tip # 7: Make phone calls to save money
If you only spend an hour or two calling insurance companies each year, you could save hundreds of dollars a year on your home insurance, car insurance, umbrella insurance, renter's insurance and even your health insurance. . Each insurer uses different formulas to determine its rates and offers you a different price for the same coverage at any time. Also do not forget that you can often save more by having multiple policies with the same insurance company.
If you are in debt with a high interest rate credit card debt, call the credit card companies and ask for a lower rate. If you have been a loyal customer, you may get relief just by asking. Call your cable company regularly to find out if there is a new promotion that can reduce your monthly bill. There may be one, especially if you let them know you are considering other suppliers.
Implementing some or all of these money-saving strategies can help you increase your retirement savings and enhance your financial security. Many of them are also relatively painless.