We can all probably use a little extra money to save for retirement, but it’s not that easy to come by.
One of the biggest problems facing Americans today is wage growth. Without it, working individuals have no upwards financial mobility, which also means many of them have a hard time saving money and planning for retirement. So, what can be done about it?
- Save small, but often.
There have been multiple articles in recent weeks, discussing how people can save money and plan for retirement by increasing what they already put away by 1%. If, for example, they put away an extra $50 per month into a tax-deferred account, the money will eventually accumulate to a significant sum. The downside of saving money, however, is that it can’t be assumed that what one’s money is worth today will be worth the same by the time retirement rolls around. In other words, the purchasing power of that money can greatly fluctuate. Still, it’s better to save small increments of money for retirement, rather than nothing at all
2. Take care of your health today!
It’s no secret that healthcare costs are going to be among some of the biggest expenses of our golden years – medicine, doctor visits, nursing home and/or home healthcare services are usually pretty pricey. Therefore, it is best we start engaging in some serous preemptive lifestyle changes today to be in the best possible physical condition for retirement. If you can save your health, you can save a lot of your money for your retirement.
According to the National Center for Policy Analysis, “Seniors age 65 and over spent an average of $4,888 per capita annually out of pocket for deductibles, copayments, premiums, and other health care expenses not covered by insurance. Their spending is more than twice as high as the average nonelderly adult.” And most importantly, “The largest expenditures occurred among those 85 and older, who spent an average of $8,304, compared to $5,066 for seniors ages 75 to 84, and $3,851 for those 65 to 74.”
3. Expand Your Savings Knowledge.
What is the most effective way to save $100,000 for retirement? How much money can a family that follows a savings plan put away compared to a family that doesn’t? Thinking about these questions can help individuals make better financial decisions, allowing them to save money overall and for retirement. For instance, the answer to the first question is simple – having your bank or employer automatically transfer a portion of your monthly paycheck into your 401(k) account will help grow your assets to $100,000. In regards to the second question – a family that follows a savings plan tends to put away almost twice as much than a family without a plan.
By saving often and expanding your savings knowledge, you can learn proactive behaviors that will help you save money now and down the line for retirement.