August 9, 2017
August 9, 2017
It happens to the best of us. You want to save for retirement and tell yourself you’ll get around to it one of these days, but it never happens. Every time you try to start, something else comes up, and you forget.
Now you’re ready to save but are lost and scared. You’re behind and have to catch up if you ever want to retire before you reach your 90s. Is it possible? Is it even worth thinking about? What if it is too late?
No matter how old you are, the earlier you start thinking about retirement, the more informed you’ll be. Read below to see what you can to catch up – and why it’s possible.
If you’re trying to save for retirement, then you probably need to come up with a lot of money. You could make lots of small changes like drinking coffee at home or bringing in your lunch everyday. Those adjustments will add up over time. But if you really want to see a big difference, then you have to look at your biggest expenses: housing and transportation.
If you add up how much you spend on housing and transportation, it’s probably between 30-50% of your total budget. Even shaving off 10% of those costs can give you a lot of money to throw at your retirement.
Downsizing might mean moving to a smaller apartment, trading in your car for an older model or using more public transportation. You could also cut costs by refinancing your mortgage, cutting back to one vehicle or paying off an auto loan.
Many employers offer matching contributions on your 401k, but some employees fail to take advantage of their company’s generosity. Ask your human resources department about the 401k program and what you need to do to receive all eligible matches.
You should also examine your vesting schedule. You might already be 100% vested, in which case your employer’s contributions are now officially in your pocket. But if the vesting schedule is long and you’re looking for a new job, then focus on contributing to your IRA.
Most people turn to cutting expenses when they need more money, but have you thought about earning more money? There’s no limit to how much you can earn, and a successful side hustle can even turn into a full-time gig.
For now, you can start small like driving for Uber or Lyft, selling on eBay or working retail. You can likely make more money by doing something specialized. If you work as a web developer at your 9-5, try making websites on the side. The more targeted your side hustle, the more money you’ll earn.
Catching up for retirement can feel daunting, especially if you’re way behind. First, start by automating your retirement contributions. You can do that by having part of your direct deposit go directly into an IRA or 401k or making automatic transfers from your bank account.
Automation takes away the annoyance of making your contributions manually every month and ensure that you never forego retirement when there’s a sale at the mall. You can set aside a specific dollar amount each month or a percentage. Some experts recommend the latter because if your salary goes up, then your contributions will too (if you automate from your paycheck).
Catching up for retirement might be difficult if you’re getting a late start, but it’s better than not doing anything at all. Take advantage of windfalls when they happen and keep at it.