“Living the slow life” is a viral trend making its way around the internet. In these posts, users discuss a simplified version of life that harkens back to the natural ease and flow of the world. For most people in the modern age, however, this dream cannot truly be realized until it is time to retire from the labor force.
Even then, you might have only so much money to live on, depending on where you retire, and that could add extra costs, stress and anything but simplicity.
To outline some key strategies that all involve simple approaches and frugal methods to save for retirement, GOBankingRates reached out to some money-saving experts. If you want to live simply and frugally, here are five key strategies for retirement savings.
Save Early, Save Often
When you are younger and just starting your career, retirement might feel like an afterthought — something you can contribute to later. Natalie Warb, a money-saving expert at CouponBirds, says it’s good to start contributing to retirement accounts early, particularly 401(k) plans.
“Early contributions lead to benefits such as compounding interest over more years, potential employer-matching contributions, and the ability to lower taxable income for tax savings,” Warb said. “According to reports from Vanguard and Fidelity, 401(k) plans invested in global stocks and bonds have an average long-term return of approximately 6% to 8%.”
Brian Quigley, a financial expert and the founder at Beacon Lending, urges everyone to understand the power of compound interest.
“Begin by allocating a set percentage of your monthly income towards retirement accounts like a 401(k) or an IRA,” Quigley said. “Over time, consistent contributions paired with the magic of compounding can work wonders. It’s not just about saving but saving smartly. Diversify your portfolio to spread risks and periodically review your investments, adjusting them based on your age, risk tolerance, and market conditions.”
Automate Your Savings
It’s great to say you will start saving for retirement, but how do you actually hold yourself accountable and make sure that money is being deposited into your future funds without skipping a beat? Warb advises to automate your savings in order to ensure consistent contributions.
“Setting up automatic transfers allows a portion of your income to go directly into a retirement savings account,” Warb said. “Studies by the Employee Benefit Research Institute show that 79% of workers who automate their savings contribute consistently, compared to only 57% of those who manually contribute.”
Prioritize Retirement Strategizing
No matter your age, how much money you make or your current financial situation, planning for retirement starts with putting it as a main goal. To do that, Warb says, you have to follow a budget, as well as cut expenses. This prioritizes retirement savings to the top of your list.
“Revisit your monthly and yearly expenses,” Quigley said. “The mortgage, often the largest monthly expense for many, offers a chance for significant savings. Consider refinancing opportunities when interest rates dip. It might seem counterintuitive, but sometimes paying a bit extra towards your principal each month can save you a significant amount in the long run.”
“Over a year, these savings can accumulate to $150 or more,” Warb added. “While seemingly small, incorporating these savings into a disciplined retirement plan can yield significant long-term results. Once the plug-in is installed, it will work automatically, providing ongoing savings.”
Shopping: Opt for Generic Brands
You might want to shop until you drop and find the name brands that you know and love to fill up your cart. This could be from your weekly trip to the grocery store or from a high-end clothing splurge on yourself. If you do that, however, you end up paying top dollar and there is little money left — if any — to put toward savings.
We all need essentials like food and clothes, though. So what’s the solution?
“Choose generic brands over name-brand products to save money,” Warb said. “Consumer Reports found that opting for generic brands can result in savings of about 20% to 25% without compromising on quality for daily needs.”
Wait To Cash In Social Security
It might seem like a good idea to dip into your savings or even tap into some of the funds of your 401(k) for emergencies. While that’s not necessarily advisable, there is an argument to be made on a case-by-case basis for doing so. One thing you do not want to touch, however, is your Social Security benefits. Warb advises waiting as long as possible to claim them.
“Delay claiming Social Security benefits until reaching the full retirement age or later,” Warb said. “By doing so, individuals can receive higher monthly benefits, ensuring a more comfortable income in retirement. Claiming benefits at age 67 ensures the receipt of full benefits, maximizing their value.
“On the other hand, retiring at age 62 may result in reduced benefits, while retiring at age 70 can increase benefits even further. By delaying the claiming of Social Security benefits, individuals can improve their financial security in retirement.”
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