Retirement is something that many people don’t think about until the very last minute. Fortunately, there are plenty of programs and services that help people take the money that they earn now and set it aside for their retirement years. The unfortunate reality is that much of America’s workforce lives paycheck to paycheck, without a lot of flexibility for retirement savings. Saving for retirement is just as important for these workers as anybody else and, although the situation might seem hopeless, there are strategies in place to help people save for retirement while working on a budget.
Keep to a budget
According to Bankrate’s Leslie Haggin Geary, 38 percent of Americans don’t keep track of their spending habits. Such behavior can be detrimental to saving for your retirement. Those who are setting money aside for retirement while working with a budget need to stay within that budget if they hope to succeed. One surefire way to keep spending within a certain limit is to track every financial transaction. Not only will tracking your spending help you determine how much money you can set aside for your future retirement, but also it can demonstrate how much money you spend on the things you will also need when it comes time to retire.
Downsize and clear the clutter
Most consumers buy plenty of things that they do not truly need. When the time for retirement grows ever closer, the importance of distinguishing between wants and needs is more vital than ever. Nanci Hellmich of USA Today advises selling items that you do not need in order to produce some extra funding. There are plenty of sites like Craigslist and eBay that make selling off unwanted items a much simpler task. Tom Sightings of U.S. News goes a step further by suggesting that as retirement approaches, people might want to consider downsizing their housing. With children growing up and going off on their own by the time most parents reach retirement age, there isn’t a need for them to necessarily hold onto a larger home when a smaller one is more affordable.
Start setting money aside
Most workers start saving money for retirement through their workplace’s 401(k) program. Still, not all workers have access to such plans, especially if they are self-employed or work for smaller businesses. Nevertheless, there are still ways to set aside money for retirement. According to the U.S. Department of Labor, individuals can sign up to open an Individual Retirement Account (IRA). As workers grow older and thus grow closer to retirement age, they can add an increasing amount of money to this account. No matter where you store the money you save for retirement, be sure to never withdraw money from your retirement savings unless absolutely necessary. Withdrawing money from your savings will not only remove money from your retirement pool, but also lower its interest.
Saving money on a budget certainly isn’t easy, but it’s not impossible either, as long as you start saving up and spending money wisely.