How to save for Retirement
Saving for retirement used to be the responsibility of a person’s employer. After years of loyal service, employees used to be rewarded with a pension that would pay them a set amount every month until they died. Today, however, a new graduate would be hard-pressed to find a company that would include a pension as part of their benefits package. Instead, most people have to find the money from their own paycheck to save in a 401(k) plan. Only then will the company contribute any money towards the employee’s retirement.
The problem, of course, is that not a lot of people are always able to come up with the money to get that company match. If you’re one of them, that means you’re unable to get free money. Here’s how to free up enough cash to start collecting that company match.
- Cut back on your utility bills. Turning off lights, shutting off the water when you brush your teeth, and turning down the temperature in the winter are probably things that you’re already doing to save money. There are thousands of other ways to save on this area of your budget, learn about a few of them and start saving money.
- Get a debt consolidation loan. If your credit cards and student loans are holding you back from being able to save for your retirement, then you need to reduce the amount that you’re paying towards those bills. A debt consolidation loan can help you do this by combining all of your loans together into a single loan with a lower interest rate. The amount that you save is often just enough to get your retirement savings started.
- Start with a small paycheck deduction. Unless you’re living right on the edge, you probably won’t notice a 1% reduction in your take home pay every month. Ask your HR representative to withdraw just this much to put in your 401(k). You’ll collect a small portion of your company match, but it’s a start on your retirement savings. Every time you get a raise, increase the savings by 1% more. This amount is so small that you’ll still be able to get a larger paycheck, but within a few years you’ll be collecting the maximum employer contribution.
<p data-sp-element=”content”>Your retirement might be years away, but by starting to save a small amount now you’ll be able to live well years down the road.