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How to Find Extra Money and Jump-Start Your Retirement This Year

Year after year we see the same numbers regarding the state of retirement savings in America. One-third of us have nothing—zero—saved for retirement, according to a report by the Employee Benefit Research Institute. Of those who have managed to squirrel away some retirement savings, 54% have less than $25,000 in savings and investments.

The most common reason people give for why they aren’t saving more is that their day-to-day expenses eat up any extra money they could invest for retirement.

We get it. Who can worry about saving for the future when you’ve got to make ends meet today?

The good news is that by making just a few tweaks to the way you handle your money this year, 2017 can be completely different from last year—and the year before that. You can stop worrying about paying your everyday expenses and jump-start your retirement plan right now by making just a few changes that won’t cost you a dime!

You Have to Budget

To truly get a handle on your expenses and have any chance of carving out money to set aside for retirement, you must do a monthly budget.

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We recommend a zero-based budget, where you first add up all your income then all your expenses. Subtract your expenses from your income until you get a zero balance. That way each dollar you earn has a mission, making it much less likely to be frittered away on nonessentials.

Your budget will also help you make retirement savings a priority. Once you’ve budgeted for essentials like food, your mortgage and transportation, create a line item in your budget for retirement.

We recommend working with an investing professional to invest 15% of your income in tax-advantaged retirement accounts like your 401(k) and a Roth IRA. For someone making a salary of $50,000, that’s $7,500 a year or $625 a month.

How to Find $625 a Month for Retirement

Now your challenge is to find $625 a month to invest for retirement. That may sound like a big chunk of your income, but remember, you’ve decided this is the year you will finally make progress on your retirement savings. It may not be easy—but it will be worth it. 

Here are a few ways you can come up with $625 a month:

Restaurants—$125 a month: According to the Bureau of Labor Statistics, the average family spends nearly $3,000 eating out. We’d never suggest you cut out restaurants completely, but it couldn’t hurt to cut back—especially for the sake of your retirement. If you cut your restaurant spending by half, you could save $125 a month for retirement.

Entertainment—$118 a month: American families spend almost as much on entertainment as they do eating out—$236 a month! There’s no need to become a hermit though. Cut your entertainment budget by half and get creative. Look for free entertainment options in your community or invite friends over instead of going out and add another $118 to your retirement savings budget.

Transportation—$60 a month: If you drive around 15 miles to get to work, you’re probably spending nearly $300 on your daily commute in a month. So why not carpool? Carpooling just one day a week could help you save an extra $60 per month.

Income taxes—$2,800 + $233 a month: If you’re one of the millions of Americans who gets an income tax refund, it could be a double blessing for your retirement account. In 2016, the IRS reported the average tax refund clocked in around $2,800. Invest that entire amount and you’ll add a great one-time bump to your retirement accounts. And, since a tax refund is simply Uncle Sam returning money that’s already yours, you should adjust your paycheck withholding so that money goes to you instead of the government. That means you can contribute another $233 to your retirement accounts each month!

Raise—$100 a month: If you’re getting a raise or bonus at work this year, it can be tempting to buy that big screen TV or go on a splurge vacation. But why not use that extra cash to build a better future instead? Even just a $100 monthly boost could make a big difference in your retirement fund.

With a few of these simple changes, you can hit your goal of $625 every month!

$125 cut from the Restaurant budget
$118 cut from the Entertainment budget
$60 cut from the Transportation budget
$233 paycheck withholding adjustment
$100 monthly raise at work

$636 available for retirement savings each month

And those aren’t your only options for finding money to invest for retirement:

  • Negotiate lower Internet, cable, and cell phone bills.
  • Shop for less expensive insurance options, but be careful about sacrificing coverage.
  • Have a yard sale—or two or three!

Make Sure It Pays Off

By taking these steps in 2017 and contributing $625 to your retirement accounts each month, a 35-year-old with zero retirement savings today could retire with more than $1.3 million! Doesn’t that sound like a goal that’s worthy of the effort it will take to reach it? We think so too!

Make sure your efforts pay off by consulting an investing professional to help you get started. An investing pro will help you understand your investments and keep you on track over the years to reach your retirement savings goals. It’s important to work with a pro you trust who will teach you how investing works so you can make informed choices about your retirement plan.

Don’t let another year go by without taking some simple steps to improve your retirement outlook. Get in touch with an investing pro in your area today!

Ramsey Solutions

About the author

Ramsey Solutions

Ramsey Solutions has been committed to helping people regain control of their money, build wealth, grow their leadership skills, and enhance their lives through personal development since 1992. Millions of people have used our financial advice through 22 books (including 12 national bestsellers) published by Ramsey Press, as well as two syndicated radio shows and 10 podcasts, which have over 17 million weekly listeners.

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Thank you!  Your guide is on its way.

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