4 Ways To Gain Momentum With Your Retirement Savings, According to Suze Orman
Written by
Vance Cariaga
Edited by
Zuri Anderson
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On her website, financial guru Suze Orman recently cited a CNBC poll showing that more than half of U.S. workers are worried that they won’t have a secure retirement.
Although Orman admitted to being “concerned” about those results, she wasn’t surprised. Part of the problem is that not enough people prioritize retirement savings.
“Are you doing everything you can to save more for retirement?” Orman wrote. “Or have you sort of fallen into a habit of thinking you’ll never be able to save enough, so you stop pushing yourself to save more?”
If you’re behind on your retirement savings, Orman offered these four ways to gain momentum and get your nest egg back on track.
Eliminate Non-Essential Purchases for Three Months
Orman breaks down expenses into “needs” and “wants.” The first group includes essential items such as housing, groceries, utilities and gas. The second group includes everything else.
Orman recommends committing to only “need” purchases for three months. This can have a dual benefit.
First, the money you save can be put toward retirement savings. And second, you can “start to build a new habit” of reducing or even eliminating the money you spend on wants.
Spend the Minimum Amount on Needs
Although you can’t skip “need” expenses altogether, you can reduce the amount you spend on them.
Orman uses the example of a car. If it’s time to buy a new one, resist the urge to drive off with one at the upper limit of what you can afford. Instead, buy a cheaper car and put the savings toward your retirement fund.
There are plenty of other ways to reduce your “need” expenses and have more money left over for retirement savings.
A blog from Merrill Edge recommends examining your budget to find out where you can cut back, such as bringing your lunch to work instead of buying it.
Cut Back on Kid Spending
As Orman noted, you might owe your children love and support, but you don’t owe them a “willingness to say yes to everything they want” — especially doing so becomes a drag on your retirement savings.
If you can’t afford to buy your kids everything, there’s no reason to feel guilty about it.
“This is not punishment for your kids,” Orman wrote. “Set expectations [and] explain your goals (financial security in retirement). Every $10, $20, $50 matters.”
Push Yourself To Do More
If you’re currently saving 6% of your salary in a retirement account, Orman recommends upping the amount to 7% and then setting a goal to push it to 8% in a few months.
Similarly, if you’re paying down a lot of credit card debt, figure out a way to add another $50 or so to your monthly payment to clear the balance off your books quicker. The goal is to “make modest shifts that move you in the right direction,” Orman noted.
Another good idea, suggested by the Financial Industry Regulatory Authority, is to put any extra money you get into retirement savings. This might include money from work raises or bonuses, tax refunds or inheritances.
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