According to a recent survey by the TransAmerica Center for Retirement Studies, 61 percent of people currently in their 40s expect to either work past age 65 or not retire at all. The numbers weren’t much different for survey-takers in their 50s, with 59 percent expecting to work past age 65 or not retire at all.
It’s no secret that Americans have some work to do when it comes to saving for retirement. Nearly every authority in the personal finance and retirement arenas has been touting the very real need for people to increase the amount of money they are saving for retirement.
Americans know what they need to do, but the big question is: “Where can I find more money to put toward retirement?” Varied reports in the financial world tell us that between 40 to 60 percent of families are living paycheck-to-paycheck.
Those living on a tight budget might find it difficult to find more money to put toward retirement, however there are often hidden ways for people to free up money that can then be used toward retirement savings.
Here are seven ways to find more money to put toward your retirement.
Start Budgeting and Tracking Spending
A 2013 Gallup poll found that only 1 in 3 American households prepares a detailed budget to track spending. The fact is, you can’t manage your money more wisely if you have no idea where it’s going in the first place. By planning out where you want your paycheck to go, and by tracking where you spend money each month, you can better direct your money toward your most important financial goals – including retirement.
Cut Unnecessary Expenses
Unnecessary expenses often devour a large portion of a household budget. The average American spends over $200 a month on restaurants alone. Here are some nonnecessities that you may be able to cut back on – or eliminate altogether – that will help you put more toward retirement.
Cable or satellite TV packages
Restaurant or takeout expenditures
Cutting back on or eliminating unnecessary costs and putting some or all of that newfound cash into retirement vehicles can help assure you’ll live more comfortably during your retirement years.
Find Ways to Decrease What You’re Spending on Necessities
Necessary expenses such as groceries and insurance can’t be eliminated from your budget, but those expenses can often be reduced. Try making a detailed meal plan for your household and grocery shop only once a week. Skip the snack foods l as well in order to reduce grocery expenditures.
Shop around for insurance quotes to see if you can find insurance for less. Work to reduce your electricity bill by being more mindful of energy usage. By examining each necessary expenditure to see if you can spend less, you can free up more cash to put toward retirement.
Drive Paid-For Cars
The average car payment for Americans today is $482 a month. Instead of taking on car loans, choose instead to buy reliable used cars that you can pay for with cash, and put the money you would have spent each month on a car payment into a retirement vehicle.
Downsize Your House
Is your mortgage payment eating up more than 30 percent of your net income? If so, it might be a good idea to downsize to something more affordable so that you can increase your 401(k) or IRA contributions each year.
Put Pay Increases Straight into Your Retirement Funds
Since pay increases equal money you’ve never had, you won’t miss the cash if you increase your retirement account contributions when your raise takes hold. Getting a 3 percent raise this year?Increase your 401(k) contributionamount by 3 percent. This type of plan won’t affect your standard of living if you make the change as soon as your raise takes effect, yet it will help you to save more for retirement.
Put Unexpected Money Toward Retirement
Getting a tax refund? A bonus? Some overtime hours at work? Instead of spending extra money on a splurge such as a vacation or the latest iPhone, make a commitment that a portion of unexpected or extra money you receive will be put into an IRA or other retirement vehicle.
Simply pretend the money never existed and use it to better secure your financial future.
Saving more for retirement doesn’t have to be painful. With a few tweaks in how you manage the money you’re currently earning, you can find more money to put toward retirement savings and still live a comfortable life now. Many people find that making small changes in financial management like the ones suggested above are hardly noticeable.
You will, however, notice the big impact your extra retirement savings make on your future when combined with compound interest. The decision to save more money toward retirement today will be one you won’t regret tomorrow.