IN THIS CHAPTER

Making savings automatic

Developing good saving and spending habits

Finding opportunities to save

Originally, the title of this chapter was “Ten Easy Ways to Save for Retirement,” but some of these tips require a little time and dedication. But all of them can help you get to your retirement fund goals.

Join an Employer-Based Retirement Plan

Working for an employer that gives you the opportunity to save for retirement is way better than having to do this on your own. Having a retirement savings plan shows that your employer cares about its employees, and this consideration often promotes a good working environment.

Saving becomes the first priority when you join a 401(k) plan. Having a portion of your pay contributed each pay period is the easiest way to save. Otherwise, saving is usually the last thing on your mind. Often, it never happens because there isn’t anything left from your paycheck at the end of the month. Getting a matching employer contribution is a big bonus.

Set Up Automatic Withdrawals

You must save for retirement on your own when your employer doesn’t offer a plan. An IRA is a great way to do that, so don’t miss this opportunity. You can make saving each pay period or month a top priority by setting up automatic transfers from your bank account into your IRA account. This is much easier than waiting to make a year-end contribution.

Start Young

Starting to save for retirement at an early age is important because there are two ways to build a retirement nest egg:

• The first is contributions you and hopefully your employer make into your 401(k) account or IRA.
• The second is the investment gains you receive on the invested money.

A dollar invested at age 25 can multiply many times by age 65. A dollar invested at age 55 may not even double by age 65. Start early even if you save only 1 percent of your pay. Then increase the amount by at least 1 percent of your pay each time you get a raise.

Deposit Bonus Money in Your Retirement Account

It may be a huge mental hurdle, but saving a substantial portion of a bonus for retirement is an option worth considering. It requires fighting the urge to do other things with the money, but you won’t regret it. I’ve never met anyone who told me they wish they hadn’t saved so much for retirement. I visited a niece yesterday who retired in her early sixties and is helping her parents during the latter stages of their lives. She told me that wouldn’t have been possible without her 401(k).

Earmark $20 a Week for Your Retirement Fund

It isn’t much, but starting with only $20 per week is $1,000 per year (you can take a couple weeks off your saving plan). This can grow to $490,000 over 40 years assuming a 9 percent average annual return. That won’t be enough to retire on 40 years from now, but it’s a good start. You can do this regardless of how much you make by eliminating a couple of things a week that you can do without.

Deposit Your Tax Refund into Your Retirement Account

Do you usually get a tax refund because you overpaid your taxes? If so, this is like receiving a bonus because it’s also money you can use for purposes other than paying your normal monthly expenses. You have the option of deciding what to do with it. Consider putting some of it in your retirement account.

Cancel Subscriptions You No Longer Use

Magazine subscriptions, online subscriptions, app subscriptions, streaming subscriptions — it’s easy to sign up for services that renew automatically. Check your card statement; you may be surprised at what you’re still paying for. Cutting out a couple of $5.99 monthly subscriptions and putting that money toward your retirement can provide better entertainment down the road.

Refinance Your Mortgage

Don’t do this to increase your mortgage but consider doing it to free up cash each month. For example, if you have owned your home for ten or more years, you can remortgage it taking a longer period to pay off the remaining balance. This reduces your monthly payments enabling you to put more into your retirement savings.

Some financial experts disagree with this suggestion because you’ll pay considerably more interest to your lender. They have a point unless you use the reduced monthly payments to invest elsewhere such as your 401(k) or IRA. The investment return on these additional savings should be as much as or possibly more than the additional mortgage interest.

Shop for Better Insurance Rates

I just reduced my auto insurance by approximately 50 percent. If I were younger, this savings could have gone into my retirement account. At my age it is a reduction in expenses, which is a good thing at this stage of life and reduces the amount I need to withdraw from my retirement account.

If you’re younger than I am and still looking to boost your retirement savings account, do some comparison shopping. Bundling homeowner and auto insurance can free up some money, as can simply checking the rates you’re paying now and seeing whether you can get the same coverage for less money.

Resist Click Bait

Algorithms track your online interests and customize ads specifically for you. Resist the temptation to explore those adorable shoes — you’ll only get more ads for adorable shoes.

Give yourself a click date once a week when you can shop online and explore all the tools, trips, and other tangents that catch your eye. Keep your focus on the main event the rest of the week and cut down on impulse buys.

Think Before You Spend

I learned a long time ago that people are either savers or spenders. Spenders must buy things on a regular basis. As a result, they struggle to save because there just isn’t enough money regardless of how much they earn. They keep telling themselves all they need is to earn more; however, earning more doesn’t often result in increased savings. This is something to consider when you’re looking for a life partner.

Even if you are a spender, you can find many ways to cut down on your spending. Consider whether you really need something and for how long before you pay for it.

If you want a secure financial future, you need to track your expenses, including monitoring those things that you don’t really need. I certainly don’t like to eat out at places where I pay three times as much for something that I can do rather easily myself.

Reduce Your Transportation Costs

Can you carpool with colleagues? Do you even need to travel to work in a post-pandemic world? If you need to go into the office or into the city periodically, choose public transportation options instead of finding and paying for parking and fuel and wear-and-tear on your vehicle.

If you need to keep a car, check fuel-efficient models or try to downgrade to a less flashy, more economical model. I switched to high-quality used autos years ago after buying many new ones. I now buy models that have great long-term records and that I can get for a fraction of the original cost. This has reduced my car expenses by at least 50 percent, and it has given me cars that I have been able to pass down to various family members.