One great financial goal to set for yourself is to get on track with your retirement savings. Even if you are only in your 20s, this is a great goal to start now.
Also, if you are on the other side of the spectrum, feeling as if it is too late to save for your retirement – think again. Even if you are in your 50s, you can still make a huge impact on your retirement fund, but you have to start now. Here’s how to break this huge financial goal into bite sized goals.
Assess Your Current Situation
Saving for retirement is a great goal, but you need to know where you stand in your retirement savings and where you need to be.
If you are in your twenties, then you have plenty of time on your side, but that time shouldn’t be wasted. Figure out how much you should be contributing yearly to your retirement fund, and meet that goal through self and employer contributions.
If you are over fifty, then now is the time to really accelerate your savings any way you can. If you meet the maximum annual contribution limit (which has slightly increased for 2015), you can also take advantage of catch-up contributions.
Make Sacrifices to Meet Your Goal
This step is important for all ages, but is really critical for those in their 40s-60s, who don’t have a hefty retirement fund.
Figure out how you can live on a lot less so that extra money can be put towards retirement funds, investments, and savings.
This may mean moving to a smaller home, which is especially practical if you have older children who are ready to fly the coop. If your retirement goals have not been met, then it’s time to start evaluating what you can live without now so that you can have a more comfortable and financially set future.
Work Up to Saving 15%
Saving anything into your retirement savings is better than saving nothing. However, it’s wise to get up to saving 15% of your income each year.
This may seem like a huge amount if you are just starting out, but you can slowly build up to that amount. The easiest way to get to 15% is to take full advantage of employer contributions.
Even if your employer only matches 2-3%, it’s still free money. Set your retirement savings to go up 1-2% each year and learn to live with the small paycheck decrease. Chances are, you will not miss the extra 1% each year.
In fact, it could just mean downgrading your cable package, buying one less outfit per month, or going out to eat less.
For example, if you made $60K a year, the 1% is only $600 a year, or $50 a month. The budget cut is minimal compared to the amazing benefits you’re giving yourself later down the road.
It’s never too late to start saving for retirement, but you have to be realistic with yourself. If you wasted many years by not saving, then you have to do a lot of catching up to meet your retirement goals. The only way you will be able to make these goals is if you downsize your budget and contribute more to your retirement fund and investments.
Are you ramping up retirement savings this year? How are you doing it? Have you struggled in the past to make saving for retirement a priority?