For many members of the workforce, retirement seems too far off or altogether unlikely to devote much thought to. After all, if you’re living paycheck-to-paycheck, simply getting through the month takes precedence over a faraway prospect like retirement. However, this isn’t to say that saving for retirement shouldn’t be a priority for every American. The sooner you start putting away money, the greater your odds of one day enjoying a comfortable retirement. Anyone who thinks that building retirement savings is too difficult will be well-served by the following pointers.
Avoid Accumulating New Debt
Overwhelming debt is among the foremost impediments to building retirement savings. Certain types of debt, like mortgages and student loans, are an inescapable part of many people’s long-term financial plans. However, other forms of debt, like outstanding credit card balances and high-interest loans, should promptly be paid off before they’re able to become an even bigger drain on your personal finances. With this in mind, be very mindful of interest rates when applying for loans and pay off your credit cards in full every month. If you’re already sitting atop a mound of outstanding debt, reach out to an experienced financial planner and discuss working out a manageable debt consolidation plan.
Set Aside Funds from Each Paycheck
Although many financial experts recommend putting at least 15% of your monthly income into retirement savings, this simply isn’t feasible for most Americans. If setting aside 15% of each paycheck is something you’re unable to do, opt for the maximum percentage you’re comfortable with. Even if it’s just 5% of each paycheck, you’ll be making a solid investment in your future. For example, frequent contributions to a Roth IRA can benefit you in a big way down the line. To get a sense of how well your money is working for you, use a convenient Roth IRA calculator.
Work Out a Monthly Budget
Smart budgeting is one of the most effective ways to avoid the accumulation of new debt. In the absence of a workable budget, it’s easy to lose track of one’s spending and allow debt to spiral out of control. Conversely, drawing up a manageable budget and doing your best to stick to it can help you pay off existing debt in an expedient manner, thus freeing you up to make contributions to your retirement fund. Additionally, even the most financially-savvy individuals sometimesgo off-budget, so don’t allow the occasional slipup to sour you on the idea of budgeting as a whole.
It’s easy to see why so many Americans put retirement on the backburner. With wages stagnant and cost of living on the rise, a sizable percentage of workers are understandably more focused on surviving month-to-month than planning for the far off future. However, building up a retirement nest egg isn’t nearly as daunting a task as many of us believe. So if you’re ready to start thinking about the future and bolstering your retirement funds, simply put the previously discussed tips to good use.