The average worker thinks they will need about $ 1.7 million saved to retire comfortably, a study by Charles Schwab found. One-third of adults believe they will need between $ 1 million and $ 3 million to retire, and 1 in 10 believe retirement will cost more than $ 3 million.
In other words, most people have their work cut out for them when it comes to saving for retirement. And yet, almost half of baby boomers have no savings at all, according to a report from the Insured Retirement Institute.
There is no silver bullet for retirement savings; Saving is hard work, no matter how much you earn or need to save. But it is a strategy that can make it a little easier.
Automating Your Savings Money: An Easier Way to Prepare for Retirement Life
To be successful in saving for retirement, you need to be consistent. Especially if you are trying to save up to $ 1
By automating your savings, or setting aside a certain percentage of your salary each month or each paycheck to go to the retirement fund, you can keep yourself on track. If you manually transfer money to your retirement account each month, it's easy to forget to save or just avoid saving because you'd rather spend the money elsewhere. But by automating your savings, you have to save each month – whether you want to or not.
Automating your savings also helps you budget for retirement. Instead of saving money you have left at the end of the month, you can create a section in your budget specifically for retirement. Basically, if you treat retirement as another expense you have to pay, it will be easier to save consistently each month.
If you contribute a fixed percentage of your salary, you will automatically be able to increase savings every time you receive a raise or bonus. Storage should not be a "see it and forget it" task; If you are able to gradually increase your pension contributions over time, you will be able to save more with less effort.
How much of your income should you save for retirement?
Many financial experts recommend saving between 10% and 15% of your salary for retirement. However, this is just a rough guideline, and the amount you should save depends on your age, how much you have currently saved and how much you are aiming to save at retirement.
If you started saving at age 25 and want To retire at age 65, you should try to save between 10% and 17% of your salary, say researchers at the Stanford Center on Longevity. However, if you wait until the age of 35 to start saving, you need to save around 15% to 20% of your income to retire by 65. And those who start saving at the age of 45 must save about 25% to 27% of salary.
If you are lucky enough to have access to a 401 (k) with matching contributions from your employer, you can take full advantage of it. At the very least, try to save enough to make a full fight – after all, it's really money.
Although you can't save much now, every little bit counts. While it doesn't sound like increasing the percentage you save by just 1% or 2% per year, it can make a big difference over time. For example, say you are currently earning $ 40,000 per year, saving 6% of your salary – or $ 2,400 per year. If you save just 1% more of your salary each year, that amounts to an additional $ 400 per year, or just $ 33 per month. It may not sound like much, but in that case, after five years you will save another $ 2,000 a year – thus bringing your total annual savings to $ 4400. And if you were to increase or otherwise increase your income over the course of By that time, it would increase your savings even more.
Saving to pensions is challenging, especially as retirement is becoming more and more costly. Especially if you don't like managing your finances, it can be difficult to manually deposit money each month for the future. But by automating your savings, you can simplify saving and stay on track to reach your financial goals.