You know you have to save for retirement. But you may not have even figured out how much you need to save. Even if you have figured out a number, you may have no idea how you are going to put aside that much money each month when you already feel like you are struggling for every dollar.
Of course, you likely already know that you should be investing your money to stretch it as far as you can. But there may be other things you can be doing to save for retirement that you may not even realize. Here are a few options you should try to pad your savings:
Be Smart About Taxes
A lot of people get a big tax refund at the end of the year, thanks to some smart deductions and the use of credits. Others might even manipulate how much they get back by increasing their tax withholdings. Instead of getting a big return and going on a vacation or buying a new computer, you can put that money into an interest-bearing savings account or a retirement fund instead.
Talk to a local tax professional to develop a strategy that will help you maximize your refund while still allowing you to meet your basic needs. Using this strategy makes it easier for a lot of people to save since the money is taken right out of their paychecks and doesn’t require them to put the money into savings themselves.
Divert Your Salary Bonus
Getting a bonus from work is another time that most people get an influx of cash. Most people consider that extra money and use it to do things they wouldn’t be able to otherwise, like buying a new couch or a pair of fancy shoes. But instead of using this money for fun things, you should divert the bonus to your retirement savings instead.
A large bonus can start drawing a lot of interest, and that can build up over the years. If you absolutely have to spend your bonus money on things for yourself, consider putting at least a part of it into your retirement fund. If you get a bonus every year (or more frequently), you can significantly pad your retirement savings with these regular deposits.
Your housing is likely your largest expense — and it’s one that can be easily cut. If you evaluate the use of your space, you likely have more square footage than you need. How many guests do you have in a year and is the number large enough to warrant owning a guest room? Additionally, freeing up some of the items being stored in your garage might make you realize that you don’t need a space that large.
By downsizing to a smaller home, you can not only cut your monthly payment, but you can also cut expenses like electricity and water. You could save hundreds of dollars a month that you could be diverting to a retirement fund instead.
Rent Out a Room
Maybe you just can’t bring yourself to sell your home. Instead of moving, you can increase your income by renting out one of the unused rooms in your home. A basement or a garage would be an ideal space to upfit for a renter so that you have a separation of space, but you can rent one of your bedrooms, as well. Just take the time to thoroughly vet potential renters, and get a good renter’s agreement in place to protect you against risk. You could easily make several hundred dollars or more per month by renting out a room in your home that is going unused anyway. You can put all of that into retirement.
The more you are able to save for retirement, the earlier you will be able to retire and the more you will be able to enjoy yourself in your Golden Years. If you aren’t saving enough for retirement, you may not be thinking creatively enough about where to get the money. Try some of these strategies, or brainstorm to find other ways that you can get more money out of your budget to put into savings.
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