Saving for retirement is a lot like sticking to a diet: you know you should do it but it’s so easy to come up with excuses not to. If you’re trying to eat well, you might promise yourself that you’ll start tomorrow after enjoying a big meal and dessert tonight. Then you find yourself repeating the same behavior.
Unfortunately, this same issue can occur when you’re trying to save for retirement. You keep telling yourself that you’ll start next month, next year, when you get a higher paying job or when you’re not so strapped for cash.
These excuses seem to be common ones among American adults. According to a GOBankingRates survey, 56 percent of Americans have less than $10,000 saved for retirement. Of those individuals, 33 percent had nothing at all saved.
Maybe what’s needed is a little motivation. Here are six reasons to save that should prompt you to make building your nest egg a priority.
Related: 42 Ways to Save for Retirement
1. Calculate How Much You Need for Retirement
You might not realize how much you need to be saving for retirement until you actually run the numbers. Taylor Schulte, CEO of Define Financial in San Diego, said that when he takes financial planning clients through the process of calculating how much they have and how much they need, it creates a sense of urgency. There’s an “aha” moment when clients realize how much more they need to be saving, he said.
You can determine your savings needs on your own by using a retirement calculator online at the websites of investment companies, such as Fidelity or Vanguard. Or your workplace retirement plan might offer online tools and calculators. You can also find a financial planner through Guidevine.com or Napfa.org, the website of the National Association of Personal Financial Advisors.
2. Think of the Tax Savings You’ll Get
Contributing to a workplace retirement account, such as a 401k, will not only help you save more for retirement, but it will also allow you to pay less in taxes now. Knowing that you’re keeping more of your money for yourself — rather than giving it to Uncle Sam — might help motivate you to save.
When you contribute to a workplace account, retirement contributions are automatically deducted from your paycheck, so the money comes out before taxes. The more you set aside in savings, the lower your taxable income will be.
“You will be saving a lot of tax dollars because all that money that’s not part of your taxable income is going into your retirement account,” said Dominique Henderson, owner of DJH Capital Management.
And there’s a good chance you can contribute more than you think. According to Henderson, a lot of people have too much in taxes withheld from their paychecks. If you get a large refund every spring, consider adjusting your tax withholding by filling out a new W-4 form so you’ll have more money to invest in your 401k each month.
If you’re self-employed, you can still get tax benefits by contributing to an individual retirement account. For example, if you save in an SEP or solo 401k, you can deduct your contributions on your tax return — which will help lower your taxable income.
3. Turn Saving Into a Game
If you’re motivated by competition, find a way to turn saving money into a game. For example, you could encourage each member of the family to cut spending in order to reach a savings goal, Schulte said. Reward whoever reaches the goal with something he or she normally wouldn’t get to do (that’s not expensive and won’t wipe out the savings).
If you’re competing with family members — or even friends — to cut costs, make sure you’re actually saving the money that isn’t being spent. To do this, you can download your bank’s mobile app. Every time you make a decision not to spend money, use the app to transfer that amount to savings right away, Schulte said.
4. Be Accountable to Someone
If you’re trying to stick to a diet, having someone hold you accountable can help, according to WebMD. This tactic can also work if you’re trying to save money.
“Have someone hold you to your plan,” Schulte said.
Your motivator could be a professional, such as a certified financial planner or an accountant. Or it could be a friend or family member. Sharing your goals with another person and documenting them will help you take action. Schulte said that just showing his goals to his wife was a game changer for saving.
5. Consider How Little You’ll Get From Social Security
About half of the nation’s married couples and nearly three quarters of single adults age 65 and older rely on Social Security benefits as a major source of income in retirement, according to the Social Security Administration. For many Americans, it’s practically their sole source of income.
If your savings balance is low, and you’re counting on Social Security to help make ends meet in retirement, be aware that the monthly check you get might not be enough. The average monthly benefit a retired worker currently receives is $1,349.59, which amounts to just over $16,000 per year.
You can visit SSA.gov to get an estimate of your retirement benefits. But be aware that the amount you see might not be an accurate picture of what you’ll receive because your benefits might be taxed. Depending on your income level, up to 50 percent of your Social Security benefits could be taxed, Henderson said.
Considering that you might not get a big payout from Social Security, and what you do get might be taxed, it’s important to save so you’ll have enough to live comfortably, he said.
6. Realize That You Might Never Retire If You Don’t Save
You need to consider what your future will look like if you don’t make saving a priority now. According to Henderson, individuals who neglect to save for retirement might not end up retiring at all.
Granted, not everyone wants to retire. About 12 percent of adults surveyed by the Federal Reserve Board said they don’t plan to retire, and about an equal percentage said they plan to work part-time in retirement. But sometimes you have to stop working and are forced into retirement because of issues such as health problems, Henderson said.
In that case, not only will you lack the savings to compensate for lost income, but you will also have added medical costs. Then you might be forced to rely on your adult children or other family members for help.
“Nobody wants to get support from their loved ones,” Henderson said. “That doesn’t make for a dignified retirement.”
To avoid ending up in this situation, try to save 10 percent to 15 percent of your income annually.
“The average person making $35,000 can save 10 percent and really go far with that,” Henderson said. “You look up in 20 years, and you’ve got more than $1 million. If you don’t leverage that, you’re going to work longer.”