Saving for retirement can be difficult, especially for those with low-wage jobs. Deciding how much to save when you’re living paycheck to paycheck can be stressful at best. What you need to consider is that the earlier you begin saving, the earlier you’ll be able to retire. No one wants to work until their 70!
Here are retirement saving strategies that everyone can utilize:
1. Direct Deposit
Find out if your employer is willing to split your direct deposit into two accounts; most are. Putting money into a separate account in this manner often works best because you never “see” the money in the first place. Contribute to a 401(k), IRA or investment account or have the money placed into a savings account. No matter what you choose, you’ll be surprised at how easy saving can be.
2. Pay Off Debt
Many people find it difficult to save when they are in debt. Sit down with your bills and make a plan. Rather than paying the minimum balance on each credit card, pay off one and then use the money you were paying towards that card to pay off the next. Your credit score may take a hit but you’ll save hundreds of dollars in interest.
If you can, open a credit card with a low introductory rate and transfer your balances to that card. You’ll save money in interest and only have one payment to make each month. Once you’ve paid off your debt, you can add extra money into your retirement savings each month.
3. Understand Social Security
Social Security benefits kick in once you hit the age of 62. Your monthly payments increase for every year you wait and top out once you reach 70. Payments are, on average, 40 percent of your wages just prior to retirement. Once you understand how much you will receive from Social Security, you can better plan for what you will need to save on your own.
4. Look For a New Job
While you may be comfortable in your current role, finding a job with better retirement benefits may be in your best interest. You’ll obviously need to weigh the pros and cons of changing careers, but retirement benefits are nothing to scoff at. If you are working for a company that offers nothing in the way of a retirement plan, you may be able to find a similar position with a company that has better benefits. It doesn’t mean you have to give your two-week’s notice tomorrow, but it does mean that you should start looking.
5. Don’t Touch Your Savings
This may seem like a no-brainer but you need to make up your mind that your retirement account is untouchable, especially if it’s a simple savings account. While there are restrictions involved with 401(k)s and IRAs, the same restrictions don’t apply to your personal accounts. Remember that your account is your nest egg; it isn’t meant to pay for vet bills, car repairs or the electric bill.
6. Put Your Money To Work
Once you’ve saved $1100, consider taking $1000 and putting it into a CD, Annuity or use it to open an IRA. Your money will earn more this way. Each time you save $1000, transfer it into your account with a higher yield. It can be risky though, so you may also consider hiring a financial planner and investing in the stock market.
Saving for retirement can be a daunting task, especially when you have other bills to pay. Don’t make it more difficult than it is. Utilize these simple steps to start building your nest egg; it’ll pay off, literally, in the future.
Author Andy Trace is a money consultant and content contributor for Finance Choices a site offering detailed comparisons for the top providers, and side by side features to compare balance transfer offers.