If you’re struggling to save for retirement, you’re far from alone. Close to half of baby boomers have zero retirement savings, according to a report from the Insured Retirement Institute — and of those who do have savings, more than one-quarter have less than $100,000 stashed away.
Saving for retirement isn’t easy, but it’s vital to have some sort of nest egg established by the time you retire. You likely won’t be able to rely on Social Security benefits alone to cover all your retirement expenses, so without a robust retirement fund, it may be a struggle just to make ends meet during your golden years.
However, there is something you can do that will make saving for the future significantly easier. It only takes a few minutes, but it can dramatically increase your savings.
Boost your savings the easy way
One of the hardest parts about saving is simply finding money to sock away. You likely have a laundry list of bills and other financial responsibilities to take care of, and if you’re focused on these goals, it’s tempting to push saving for retirement to the bottom of your priority list. After all, if you don’t pay your bills, you’ll face some stiff penalties. But if you put off saving for a few months or years, who will even know?
Yet there are serious consequences to not saving, even if they don’t appear right away. If you put off saving too long, it becomes difficult or even impossible to catch up and achieve your retirement goals. Before you know it, you’ll be nearing retirement age with little to nothing saved and not enough time to catch up.
That’s why if you’re serious about saving, you should treat it as if it’s another bill you absolutely have to pay each month. And the easiest way to do that is to set up automatic retirement fund contributions.
Set up your accounts so that a certain amount of money is automatically transferred to your retirement fund each week or month. If you have a 401(k) through your employer, this is especially simple because most plans allow you to transfer a portion of your paycheck directly to your retirement account. When the money never reaches your bank account in the first place, it’s a lot easier to avoid spending it before you can save it.
If you don’t have access to a 401(k) and are saving in an IRA, you can set up automatic transfers straight from your bank account to your IRA on the schedule you choose.
When you’ve set up automatic contributions, it’s also easier to add savings to your budget. You know exactly how much you’re saving each month, which gives you a better idea of how much cash you have left over to spend. If you treat retirement saving as an afterthought, only stashing away the scraps you have left at the end of the month, you’re more likely to not save enough or save nothing at all.
How much should you save every month?
The amount you should be saving depends on your goals and your age. Most experts recommend saving around 10% to 15% of your income, but you may need to save significantly more if you’ve been putting off saving.
If you start saving early, you won’t need to save as much each month to accumulate a significant amount in savings by the time you retire. But if you’re only a few years away from retirement and have little or nothing squirreled away, you’ll need to save a lot more each month.
To determine your individual saving goal, try using a retirement calculator to get an estimate of what you should have saved by retirement age, as well as how much you should save now to achieve that goal. That will at least give you a starting point so you know roughly how much you should contribute to your retirement fund each month.
If you’re seriously behind on your savings, be prepared for some sticker shock when you calculate how much you should be saving. You’ll likely need to save a good chunk of change every month, and it’s easy to feel overwhelmed if that goal is out of reach. But the worst thing you can do in that situation is to do nothing. Even if you can’t afford to save thousands of dollars per month, saving anything is better than saving nothing.
Think about how much you can reasonably afford to save each month, and set up automatic contributions so that you’re saving that amount consistently. If you can, try to increase your contribution rate at least once a year, or whenever you get a bonus or raise. Saving an extra $1,000 or so each year may not seem like it would make a big difference, but over time your savings will grow exponentially.
The key to saving more for retirement is to simply make saving part of your everyday financial life. Treat retirement saving as a priority, and make sure you’re socking at least a little money away every single month. That consistency will pay off big time down the road, and you’ll give yourself a much better chance at growing a strong and healthy nest egg by retirement age.