Financing Your Life A Guide to Controlling Your Finances, Today
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There’s a big difference between knowing you should be saving for retirement and actually saving for it.
For many people, that difference looks like a wide gulf of insurmountable chores that they keep putting
off for another day. But eventually, that “other day” is going to be your retirement day—and you won’t
have any savings to rely on if you never get started. This is going to be a true reality for way too many
Americans—we know this based on recent statistics issued by the Employee Benefit Research Institute,
which found that 28 percent of Americans surveyed had less than $1,000 in savings and 57 percent had
less than $25,000.
In order to make the process of retirement saving seem less overwhelming and to make getting started
easier, take a look at these three essential steps everyone should be following.
1. Contribute to work plans: If you have any kind of retirement plan at work, including a 401(k),
make sure you are contributing something. If you can’t afford to max it out or even contribute
enough to get the employer match, don’t decide that it’s not worth saving anything at all. Even
saving a small amount adds up.
2. Set up an autodeposit to an IRA: Individuals under 50 can contribute up to $5,500 to an IRA and
those 50 or over can contribute $6,500 annually. Don’t worry about being able to max out your
contributions—just make sure you’re contributing something each month. Set up an autodebit
from your bank account. Even at only $40 a month, you will save almost $500 per year.
3. Always spend with the long term in mind: You might think that your overall retirement planning
has no connection to your current spending but, in fact, it does. Think about it this way: every
dollar you spend today is one less dollar you can save for later. And every future dollar you
obligate toward debt is one less dollar you can set aside for retirement.
Retirement planning sounds overwhelming, and at some stages it definitely can be. But it all starts with
the very simple task of saving money—no complex planning required.
