According to one of the country’s founding fathers, Benjamin Franklin, “time is money,” and the modern employee will agree.
Time is one of the best allies you have, primarily if you’re investing in your retirement. The earlier you start, the more time you have to save. And the more time you have, the bigger your retirement savings will be.
If you started saving for retirement the moment you got your first job, good for you! However, millions of Americans did not do such a thing. According to a U.S. Federal Reserve report, almost a quarter of adults in the country have no retirement savings at all.
Americans Without Retirement Plans
Not surprisingly, the most significant number of adults without retirement savings is the ones between 18 and 29 years old. Among them, 42 percent have no retirement savings. Similarly, 26 percent of Americans aged 30 to 44, 17 percent of those aged 45 to 59, and 13 percent of people 60 and over also do not have any penny saved for retirement.
If you’re one of these people, it’s not too late for you. With the help of financial services for retirement, you can still catch up. Here’s how:
1. Take care of your bad debt
The higher the interest on your debt, the more time you need to pay it off. Imagine if instead of making interest payments on your debt, you allocate that portion to your retirement savings. You could have saved quite an amount for retirement. This is why paying off your credit card debt, car loans, and other high-interest debts is one of the first things you can do to start saving.
2. Invest in an IRA or 401(k)
An individual retirement account (IRA) helps you build your nest egg. With a Roth IRA, you get to contribute with after-tax money, meaning your savings will grow federally tax-free. It is an excellent option if you’re self-employed or work for a company that doesn’t offer a 401(k) plan. A 401(k) is a retirement savings plan offered by many employers. Through this, a portion of your salary goes to your retirement savings, which your employer can match.
3. Automate your savings
There’s a personal finance strategy called “Pay Yourself First,” which means automatically channeling a portion of your salary towards your savings before you even receive your paycheck. This way, you don’t have to manually deduct the amount from your paycheck and reroute it to your savings account. This method of manually saving is prone to failure because you can always find excuses to spend your money elsewhere. So this method makes it appear like you never had the money in the first place, except you do, and it’s already on your retirement savings—away from your wallet and payroll account.
4. Lower your spending
Although self-discipline is an important trait when it comes to saving up, this doesn’t mean depriving yourself. You simply have to evaluate your budget and where every cent goes. Then, you might find that you can slash some of your expenses and put that money on your retirement savings instead.
It’s easy to put off planning for your retirement when you’re young because you have a lot of time. But before you know it, you might be approaching retirement age without enough money saved. With these tips, you can hopefully get to start saving right away and live out your retirement comfortably.