5 Ways To Save for Retirement You Can’t Overlook on a Low Income
Written by
John Schmoll
Edited by
Angela Corry
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The economy has been trying for many Americans recently. Fewer than one-quarter of Americans felt good about it in 2024, according to Pew Research. That sentiment can make saving for retirement more challenging. A recent study from Zety bears this out, showing that 40% of workers polled can’t save for retirement due to low salaries and increased costs.
These are five ways to start saving for retirement now, even on a low income.
Get Help From Your Employer to Eliminate Debt
Debt is suffocating, particularly on a reduced income. Americans held over $18 trillion in debt at the end of 2024, according to the Federal Reserve Bank of New York. This pervasive debt makes it challenging to begin retirement planning.
Don’t overlook your employer as a resource to eliminate debt and free up funds for retirement.
“Employees can begin by seeking budgeting and debt repayment support, which can free up funds that might otherwise go toward high-interest payments,” said Jasmine Escalera, career expert at Zety.
Save Small Amounts
You don’t need thousands of dollars to begin saving for retirement. Simply beginning to save is what’s most important, even if it’s small amounts.
Escalera told GoBankingRates, “One often-overlooked strategy is automating even small contributions. Many workers feel they can’t afford to save, but setting up automatic transfers, just $10 or $20 per paycheck, can build momentum over time.”
A 401(k) is a good way to do this, especially if you receive a match from your employer. If that’s a challenge, consider using a round-up app like Acorns.
Find a Better Job
Sometimes, what holds workers back is the lack of a high-paying job. Looking for a better-paying job could be a good way to jumpstart retirement savings. The Zety report bears this out, revealing that 26% of workers feel insufficient salary growth is a significant barrier to saving.
Making a move is possible, but do it wisely.
“Before making a move, consider having a direct conversation with your manager about a raise, bonus, or available retirement benefits. To strengthen your case, come prepared with salary benchmarks, key accomplishments, and concrete ways you’ve contributed to your team’s success,” added Escalera.
If this doesn’t move the needle, seeking a better-paying job can help provide funds for retirement planning.
Create a New Source of Income
Finding a new, higher-paying job isn’t always possible. In that case, consider identifying a new stream of income to aid in saving for retirement. A side gig can be a good choice. Roughly 5.3% of the workforce had second jobs in 2024, according to the U.S. Bureau of Labor Statistics.
“Additionally, monetizing existing skills through freelance work, consulting, or side gigs can create a secondary income stream. These approaches provide proactive ways to start saving, even with limited resources,” said Escalera.
Consider applying funds from the second job directly to retirement to boost savings.
Use the Saver’s Credit
The government wants to incentivize saving for retirement for Americans with low to moderate income levels. The Saver’s Credit is one way it does this.
Qualifying Americans save up to $2,000 if married and filing jointly annually for retirement with this program. The credit can help increase a tax refund or mitigate tax owed. Saving for retirement can feel daunting for Americans on a reduced income. With a little creativity, it’s possible to begin saving and develop habits that will help as finances improve.
Saving for retirement can feel daunting for Americans on a reduced income. With a little creativity, it’s possible to begin saving and develop habits that will help as finances improve.
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