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A recently published survey shows yet again how unprepared Americans are for retirement. Ramsey Research found that 54% of Baby Boomers (people ages 53–71) still in the workforce have less than $25,000 saved for retirement. Even more alarming is the fact that more than half of that group have no nest egg at all.
That sounds pretty hopeless, but it could be easier than you think to turn that trend on its ear. By working with an investing pro to contribute $300 a month—about 6% of the median income—for just five years, you could retire with $260,000 in your nest egg in 30 years. That may not provide a four-star retirement, but at least it’s a start!
That means with a little planning and a more-than-average dose of motivation, nearly everyone can retire with at least enough money to cover their bills.
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Save Without the Sacrifice
Don’t get confused. We’re not saying you should invest $300 a month for the next five years and call it a day. To get the kind of retirement we all dream of, you need to consistently put away 15% of your income. But for right now, let’s just focus on that first $300. Where can you find $300 a month in your budget to get started on your nest egg?
Your first thought might be to slash your restaurant or entertainment budget or to get a second job. Obviously, if you’re overspending in those categories, cutting back is a wise choice. And extra income from a side job makes reaching any financial goal much easier.
But you may not have to completely sacrifice your time and your small luxuries. Here are a few painless but effective options you can consider to help you kick-start your retirement plan:
Roll In That Raise: Any time you get a bump in pay, it’s cause for celebration—not because you can buy more stuff, but because you can roll that money right into your retirement account! According to Aon Hewitt, employers project the average raise to be 3% this year. With the median household income at $56,500, as reported by the Census Bureau, that 3% raise could be worth nearly $1,700 this year. That works out to $140 a month! Getting a bonus? Shift that into your 401(k) or Roth IRA for an easy way to reach your goal without feeling the pinch in your paycheck.
No More Loans for Uncle Sam: The average income tax refund was $2,860 for the 2016 tax season, according to the IRS. That’s a hefty sum to loan to Uncle Sam for a year. It just takes a few minutes to reduce your withholding amounts and start sending $238 more to your 401(k) every month.
Rake In Cash With a Yard Sale: People spend more than $4.2 million at yard sales each week in the U.S., according to Statistic Brain. Get in on that action and sell some stuff! Put the profits toward retirement, where even $100 can turn into thousands of dollars in your nest egg.
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Miscellaneous Moolah: Don’t forget about small expenses that can add up.
- Cell phone bills can be pricey these days, and with unlimited plans making a comeback, it’s easy to overpay for services, features and data that you don’t really use. If you only use 3 GB of data, why pay for 16 GB? By switching carriers or opting for a plan with less data, you could have an additional $50 a month to put toward your future wealth.
- According to Consumer Reports, those who cut cable save $104 on average. Switch to a streaming service for less than $10 a month and add $90 to your monthly retirement investing.
Utilizing just a couple of these options has the potential to put you above your $300-a-month retirement investing goal—and those are just a few of the possibilities. Get creative and see what else you can come up with. Keep in mind that this isn’t just a penny-pinching exercise.Every dollar you add to your monthly retirement investing means a more secure retirement for you!
Make Your Money Work for You
After all that work finding money to invest for retirement, the last thing you want to do is put it in a bad investment. A 401(k) with a matching contribution from your employer is a good place to start since it gives you an instant—and guaranteed—return on your money.
But don’t stop there. Add a Roth IRA for tax-free withdrawals in retirement and a wider selection of good growth stock mutual funds. Don’t follow in the footsteps of the majority of Americans who keep putting off their retirement savings. Find an investing pro in your area today!