Saving for retirement is a lot like exercising; we know we should do it, but we always seem to find a reason to put it off. We get busy, we get tired and at the end of the day, it’s the last thing we want to think about. But we have to think about it because, like it or not, it’s coming.
If you need to jump start your retirement savings plan, here are 42 ways to get started.
1. Put 15 percent of your salary in savings.
Ideally, you’ll start doing this with your first paycheck. If 15 percent feels like a big number, start small and gradually increase the percentage over time. The more time you have to save, the longer the money has to accumulate and earn compound interest.
2. Get a 401(k) match from your employer if they offer it.
Think of a 401(k) match as free money — because it is! Just keep in mind that you won’t actually get to keep those contributions until you are fully vested in your employer’s plan, which could take many years.
3. Set up an automatic direct deposit into an IRA.
The easiest and least painful way to start saving is to put your contributions on autopilot. You can even automatically schedule incremental increases over time. We promise you won’t feel a thing.
4. Consider investing in a Roth IRA if you’re in a low tax bracket.
A Roth IRA taxes you based on your current tax bracket, but any future withdrawals aren’t taxed as long as you meet certain contributions. Roth IRAs are smart retirement investment choices for young professionals who are in the beginning stages of their careers with lower salaries. They fall into the lower tax bracket and will not have to pay based on the higher tax bracket they might enter as they advance in their careers.
5. Take advantage of higher IRA contribution limits for older savers.
People who are 50 years old or over at the end of the calendar year can make additional, or “catch-up,” contributions to their IRA accounts. For 2014, the limit is $5,500, and in 2015 it’s $6,000.
6. Conduct an annual audit of your retirement account fees.
A fee increase of just 1 percent to 1.5 percent could amount to thousands of dollars over the course of a year.
7. Don’t make early retirement account withdrawals.
People who withdraw from their retirement accounts before age 59 ½ are subject to a 10 percent penalty fee, as well as tax on the income. There are a few ways you can avoid withdrawal penalty fees such as using IRA distributions to pay for medical insurance and expenses, college costs or your first home.
8. Rent out your spare room, storage space or garage.
People of all ages can tap into the new sharing economy by renting out space in their homes, extra parking spots or storage in their attics and garages. Airbnb, VRBO and justpark.com are popular sites that facilitate these services.
9. Delay social security payments for as long as possible.
Retiring at age 62, the youngest age you can qualify for social security benefits, will decrease your social security benefits by about 25 percent. If you wait until the full retirement age, 66 or 67, you’ll receive 100 percent of the benefit. If you delay your retirement beyond your full retirement age, your benefits will be increased by a certain percentage until you reach 70.
10. Retire in an inexpensive location.
A simple Google search can reveal the best places for people to retire, both in the U.S. and overseas. The right location can reduce living expenses and taxes, allowing you to keep more money in your retirement fund.
11. Downsize your life.
Downsizing provides an opportunity to save on housing payments, home maintenance, utility fees, cost of living and taxes. It’s also a great way to trim down what you own and enjoy the simpler things in life.
12. Shop around for better rates on auto, homeowners and health insurance.
Some insurance carriers offer discounts to long-term policyholders, but that doesn’t necessarily mean you’re actually saving money. Do an annual audit of your insurance expenses, and shop around to make sure you’re getting the best deal available.
13. Share a car with your partner or spouse.
Many couples might find they can get around just fine by sharing one car, which cuts down on gas, maintenance and insurance costs. Retirees might be able to forgo car ownership altogether by using ride and car-sharing services, or maybe even self-driving cars.
14. Use senior citizen discounts.
Aside from growing wiser, one of the biggest perks of getting older is taking advantage of senior discounts on everything from movie and airline tickets to cell phone plans and restaurants.
15. Consolidate if you have multiple IRAs.
If you’ve got a bunch of IRAs floating around, consider consolidating them into one, easy-to-manage account. But if some of them are Roth and some are traditional, get professional advice before you start converting — you might take a tax hit that sacrifices your savings.
16. Put every tax refund into savings.
It’s tempting to use the extra money from your tax refund on a new toy or vacation, but these spurts of cash provide the perfect opportunities to give your retirement savings a big boost.
17. Make a weekly meal plan.
Planning weekly meals can keep you from impulsively eating out and overspending at the grocery store, as well as reduce your food waste. There are tons of apps and blogs with meal ideas and planning guides to help you stick with it, so no excuses.
18. Cut the cable cord.
Cable television is no longer an essential utility; it’s an overpriced and unnecessary service. MarketWatch has an interactive cord-cutting calculator to help you determine just how much you can save by ditching your cable bill.
19. Get a part-time job during retirement.
Many retirees enjoy working part time as a way to increase their income and stay active in the community. Some part-time job ideas include teaching, coaching, real estate, notary services and consulting.
20. Exercise, eat well and take care of yourself.
According to Fidelity’s 2014 Retiree Health Care Cost Estimate, a couple that retires today at 65 will incur $220,000 in health care costs during retirement. And that doesn’t include in-home, nursing home or long-term care. Taking care of your health early in life can help cut down on these costs.
21. See a certified financial planner once a year.
Your money can grow faster and last longer if you use a trusted certified financial planner to help you set goals, keep you on track and protect your assets. Many CFPs specialize in retirement planning and work on a fee-only structure, which can reduce the cost of the service.
22. Use your home equity to fund your retirement.
If you’ve built home equity over the years, consider selling your home and using the proceeds as part of your retirement fund. Just remember that your cost of living might be affected if you need to rent a new home or move into a retirement community.
23. Learn to stick to a budget.
Think of a budget as an action plan, not a deprivation plan. It’s not about how much you can afford to spend; it’s about how much you can afford to save.
24. Bring your own lunch to work.
Buying lunch every day could cost you $2,500 a year or more. That’s money that should be going into your retirement fund. Plus, making your own lunch is healthier and takes very little effort.
25. Pay off credit card debt as soon as possible.
Whether you decide to pay off your highest rate first or start with the card with the lowest balance, you should pay off that debt if you want to make any headway on your retirement savings goals.
26. Negotiate better interest rates on your credit cards.
And while you’re paying down that debt, make sure you’re getting the lowest possible rate from your credit card issuer. A simple phone call and negotiating could save you thousands in credit card interest rates this year alone.
27. Use a health savings account or flexible savings account.
These tax-advantaged accounts set aside a portion of your salary to cover qualifying expenses, like childcare and medical costs. This reduces your taxable income, which means you’ll have more money in your pocket to put toward your retirement fund.
28. Open an Individual Development Account.
An Individual Development Account (IDA) can help low-income individuals save toward a specific goal such as home ownership, which can be a key asset during retirement. With an IDA, savings amounts are matched at various ratios. However, you must meet certain criteria to qualify.
29. Have a garage sale.
Clear out those closets, and get rid of that storage space once and for all. Turn your junk into cash, and learn how good it feels to live with less stuff and more money.
30. Invest your holiday bonus.
If you receive a holiday bonus each year, turn that money into the gift that keeps on giving by putting it right into a retirement account.
31. Start small, and slowly increase your savings rate.
Start with $100 a month, and aim to double it after a year, and the year after that, and the year after that…
32. Be realistic about your returns.
Ignore tall tales of 20 percent returns — it’s completely unrealistic to expect that from your retirement savings. The longer you have your money invested, the more likely you will see average returns.
33. Re-balance your retirement accounts.
Once you have accumulated a significant retirement account balance, make sure you have a balance of stocks, bonds and cash that reflects your risk tolerance.
34. Max out your 401(k) and IRA when your children outgrow childcare.
Childcare costs are one of the biggest challenges working parents face. In some cities, parents spend more on childcare than they do on rent, according to a 2012 report by the Child Care Aware of America. Once your kids have flown the nest, invest that money into your own future.
35. Build your risk tolerance.
If you’re worried about losing money in the stock market, pick a target-date retirement fund with a date that is earlier than you plan on retiring. The plans automatically adjust based on which year you plan on retiring. Set your retirement date earlier to lower your risk, and set the date back as you get more comfortable.
36. Set benchmarks for how much you should be saving.
There is a plethora of online calculators to help you determine how much you should be saving to reach your retirement goals. Let them be your guide.
37. Don’t obsess over your retirement account balances.
Look at your overall retirement savings once a year. Daily or monthly monitoring might make you feel like you aren’t getting anywhere.
38. Don’t forget to factor in inflation.
Today’s cost of goods and services will mostly likely not be the same when you retire. When you think about how much money you need to retire, make sure to adjust your estimated living expenses for inflation.
39. Stop saving for college.
Parents often make the mistake of sacrificing their own retirements to save for their children’s education. Stop contributing to a college savings account until you are caught up on your retirement savings goals. Remember: Your child has the option to get a student loan, but you won’t be able to get a retirement loan.
40. Ask your employer to start a retirement plan.
If your employer doesn’t offer a retirement plan, ask for one. There are simple retirement plans employers can offer that benefit both employees and the business.
41. Say “no” to a new car.
Auto loan rates are low and shiny new cars are tempting, but a new car is not an investment — it’s an expense. Cars quickly depreciate and have high operating expenses. Instead, buy a used car, and drive it down to its very last mile.
42. Educate yourself.
If you’re going to get serious about saving, you need to educate yourself. Learn about investing and asset allocation by reading books, articles and trusted financial websites and blogs. The more you know, the better choices you’ll make.
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