SavingForRetirement
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Some people will tell you it’s never too late to start saving for retirement, but others will tell you that it’s already too late if you haven’t started yet.

The truth, of course, lies somewhere in the middle, and it’s what this article will cover – how to start saving for retirement at any age and make it work. So don’t panic! There’s still time to save up and get ready to leave the workforce on your terms without having to worry about money later in life.


How Much Do You Need?

Answering that question is simple, but getting there isn’t. If you’re 30 years old and just beginning to set money aside for your later years, where should you begin? Whatever path you choose—whether that be through a 401(k) at work or an IRA on your own—you’ll want to make sure you’re putting away enough.

The absolute minimum most experts recommend is 10% of your annual income, with 15% being a more reasonable number if possible. Even then, if you can put away, even more, each month early on in your career, doing so could help dramatically down the road.

After all, time is on your side when it comes to investing. The longer you have before retirement; the better off you’ll be because compounding interest allows for growth over time. That means $100 invested today will grow into $125 in five years (assuming 8% growth), $151 in 10 years (10%), and $198 in 20 years (8%).


Where Can You Save Your Money?

One of the biggest challenges with saving is determining where to put your money. There are several options out there, each with its strengths and weaknesses.

Ideally, you should have a combination of all of these accounts, but that may not be financially feasible given your current situation. Think about your liquidity needs – will you need access to cash in case of emergency? If so, then a savings account might not be best since they usually pay less interest than other forms of savings accounts.

Plus, there may be penalties associated with early withdrawals. On the other hand, if you don’t mind sacrificing liquidity (and who doesn’t want free money), then a CD might make sense.


How Long Does It Take To Retire?

If you’re wondering how long you have to save for retirement, a good rule of thumb is that you should try to save 25 times your current annual income by age 65. As an example, if you earn $40,000 per year today, and want to retire comfortably when you’re 65 years old, you need to be able to have saved $1 million by then.

But things get complicated when we account for inflation and average life expectancy—so let’s break down how much money experts say people should be saving at every stage of their lives. Once you’re ready to launch your savings plan, think about how much effort you’ll put into it each month.

Saving just $50/month can make a big difference over time – assuming you don’t touch it while it’s accumulating – but there are diminishing returns on larger amounts as well.

Even though upping your monthly contributions to $100 may not seem like much more than doubling them, for example, those extra dollars will take longer to accumulate because they’re starting from such a small base amount ($50 vs. $25).

Similarly, trying to save 50% more isn’t going to get you any further than saving 10% more would.

Saving Without Seeing Returns Can Be Hard, But Rewarding

It can be frustrating not having enough money to spend, but living below your means can help you make it to retirement.

According to a survey from TD Ameritrade, 27% of Americans have $0 saved for their golden years. Of course, that’s not ideal, but it is possible you don’t need as much as you think.

If so, commit to the meeting or beating your budget with these tips For example, if you want to save $2,000 per month and only have $1,500 coming in after bills are paid, consider cutting back on expenses by reducing dining out and going out with friends (or doing both), using coupons at grocery stores and shopping sales.

Or maybe look into getting a roommate or moving somewhere cheaper—that could help cover some of those costs without feeling like you’re sacrificing too much quality of life. And if all else fails? Try asking for an increase at work—you might just get one!



Research Shows The Power Of Compound Interest

Based on a $40,000 salary and an average yearly return of 7% (the long-term historical return of stocks), you’ll end up with over $1.2 million in 40 years if you start putting away just $250 a month starting at age 25.

If you wait until 35, though, that same amount of money will only grow to $449,000. The power of compounding gets even more interesting when comparing 45-year-olds with 30-year-olds: By 50, your 30-year-old neighbor will have saved around half as much as you did at 45 -just over one million dollars vs. about two million dollars—despite each having had another decade to save.

And while it’s true that 401(k)s were not widely available back then, there are plenty of other ways to save. Even if you can’t afford to max out your 401(k) right now, saving something is better than nothing at all.

And there are many other strategies you can use besides contributing directly to a 401(k). For example, say you’re not eligible for a company match because you don’t work full time or make enough money yet.



What If You Hit the Jackpot Early?

There’s nothing wrong with taking a little early retirement. If you were young and had some great timing, you may want to retire before you even hit your full Social Security benefits. However, many young people don’t consider their other sources of income (such as rental properties) when making decisions about when they’ll retire.

For example, if you haven’t maxed out your contributions and decide to retire at 50 instead of 55 or 60 because you have an outstanding 401(k), are your other sources of income enough?

In most cases they probably aren’t, so don’t make hasty decisions based on just one source of income. And remember that while you can take money out of your 401(k) penalty-free before age 59 1/2, there will be taxes due on any earnings that have been withdrawn.

This means that if you withdraw $50,000 from your account before age 59 1/2, $10,000 would go toward taxes—leaving only $40,000 available for spending. If you think early retirement is in your future, be sure to factor in these tax implications. If not, planning makes sense for you financially, but you’re still worried about how much money is required for retirement today—don’t worry!


Are You Willing To Adjust Your Lifestyle To Reach Your Goals?

The truth is, if you want more money in retirement, you’re going to have to make sacrifices. That doesn’t mean cutting out your daily Starbucks fix—you can still have a latte once in a while (after all, life’s short!). But you should try and cut back on other less important things.

For example, maybe instead of having cable TV and Internet, you go with satellite TV (or no TV at all). Maybe instead of going out for dinner twice a week, you make it one time. Even making small changes like these can help free up more cash for your IRA or 401(k) account so that you can meet your goals—and then some.

If you feel uncomfortable with making lifestyle adjustments, don’t worry. This guide will help walk you through them step by step. Remember: Life is about balance and finding ways to make your day-to-day activities work for you.


To Save More Money Towards Retirement:

Cut expenses from extraneous spending such as fast food lunches, shopping sprees, and movies at home; trim down grocery bills by only buying what’s on sale; sell unused items on eBay or Craigslist.

Look into getting rid of subscriptions such as gym memberships or video rentals; get rid of unneeded cars; turn off lights/appliances when not in use; unplug electronics when not charging; buy generic brands over name brands when possible… the list goes on!



What Else Can You Do If You Haven’t Started Yet?

So if you haven’t started yet, what should you do? Well, first of all, relax. It’s not as bad as you might think. Even if you haven’t saved a penny in your life, you still have time on your side—and some unique advantages that can help make up for lost time. Here are three things you can do now:

1) Start with an emergency fund: Having at least six months’ worth of living expenses tucked away is a good idea and will reduce any anxiety about having enough money to live on.

2) Start investing with whatever money you have available: Even if it’s just $50 or $100 per month, starting early is better than never starting at all.

3) Learn more about investing: There are plenty of resources out there (like Investopedia!) that offer solid information and advice without being overly complicated or boring. Your future self will thank you later!

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