I’m About To Retire: These Are the 5 Money Moves I’m Making Now

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Unfortunately, most Americans don’t have enough saved up for a financially problem-free retirement. According to the 2022 Survey of Consumer Finances conducted by the U.S. Federal Reserve, the median retirement savings for all families is only $87,000. In areas with high costs of living, this amount is unlikely to last more than a few years. Generally, you should aim to save 10 times your pre-retirement income by the time you reach age 67, according to Fidelity.
If you’re nearing retirement and are one of the many Americans who have not built up a large enough nest egg for your golden years, it’s time to play catch up. Though you may not be able to save millions in a short timeframe, at least you’re improving your retirement outlook. Let’s take a look at what money moves Trae Bodge, soon-to-be retiree and smart shopping expert at TrueTrae.com, is making to ensure a comfy retirement.
1. Look For Wiggle Room in Recurring Expenses
“A good place to start is your phone and cable. I was paying a high monthly rate for my cellphone, so I switched to Mint Mobile, which runs on the TMobile network and has plans as low as $15/month, saving me $100 for my whole family,” Bodge said.
Besides switching her mobile plan, Bodge also cut the cord on her cable and now uses a Roku and pays for individual streaming channels.
While these recurring expenses may not seem like much, they can quickly add up over time. If you have various monthly bills that are eating up your disposable income, take time to evaluate these expenses and consider whether they’re necessary. By doing so, Bodge has been able to save around $150 per month more toward her retirement.
2. Use the ‘Set It And Forget It’ Savings Method
Another money move Bodge has been making to set herself up for a retirement free of financial worries is by using the “set it and forget it” strategy.
“For example, I’ve put some extra money in an FDIC-insured certificate of deposit at Bread Financial, where the annual percentage yield for a 1-year CD is 5.5% right now. This way, I know my nest egg is safely tucked away and earning interest,” Bodge said.
Bread Financial also has high-yield savings accounts where you can earn 5.15% APY with a minimum deposit of $100. To make stashing money away for retirement easier, Bodge suggested setting up automatic savings so you’re not tempted to spend that cash elsewhere.
3. Use the ‘Spare Change’ Savings Strategy
Bodge set up an account on Acorns many years ago and has been using the platform to put her spare change toward her retirement fund.
“There are a few similar platforms, but with Acorns, you connect your debit and/or credit card, and every time you use those cards, the spare change is invested for you,” she said.
Here’s how it works: Say you spend $14.49 on dinner. Acorns will automatically round the amount up to $15 and invest 55 cents into your future.
“You can also elect double or triple the spare change and/or set automatic withdrawals to speed up the saving process,” Bodge added.
4. Don’t Size Up
Rather than trading up for a bigger home every few years, Bodge lives below her means to sock extra money away to reach her retirement goals.
“My husband and I have been fortunate in recent years, but we have decided to stay in our same starter-size home — we’re almost empty nesters, anyway,” Bodge said. “We take this same approach with cars, which are mid-priced, reliable, good on gas, and enjoyable to drive.”
If you’re also nearing retirement like Bodge, it’s more important than ever to make thoughtful decisions about your expenses and understand that a comfortable retirement often begins with disciplined financial choices. While there’s nothing wrong with upsizing and trading your old car in for a new one, you should always weigh the long-term financial impact of decisions like these.
5. Contribute To Tax-Advantaged Accounts
As a sole proprietor, Bodge contributes to tax-advantaged investment accounts like SEP IRAs and Roth IRAs to not only build her nest egg but also save on taxes. Both a SEP IRA and a Roth IRA offer tax benefits. The main difference between the two is that contributions to SEP IRAs are tax deductible, whereas contributions to a Roth IRA are not. In other words, SEP IRAs offer tax-deferred growth, and Roth IRAs provide tax-free growth.
Besides SEP IRAs and Roth IRAs, other tax-advantaged accounts you can explore to build your retirement funds while saving money on taxes include 401(k) plans, health savings accounts (HSAs), 529 plans and traditional IRAs.
Every Penny Counts
One thing Bodge wishes she had done differently when she was younger is to continue to save even when money is tight.
“My husband and I had a few lean years during which we put our savings on pause. Had I known about a spare change platform, like Acorns, we could have at least been saving in small increments during those tougher times,” she explained.
So, even if you only have $50 left each month to contribute to your nest egg, do it! With the power of compound interest, your monthly contribution of $50 into an account offering 7% APY can grow to $26,000 in 20 years. The earlier you start investing for your future, the more time compounding has to work its magic.