The median American household only has $11,700 in savings. Some people manage to be super-savers while others fall behind, and many have no savings at all.
If you want to have money in retirement, you’re likely asking, “How much do I need to save?” You’re asking the right questions, and we are here to help you get on the right track. If you’re already saving, we will help you figure out even better ways to boost your savings for a brighter retirement.
Continue reading this article and learn how much you should be saving for the best results.
Work With a Financial Advisor
Everyone has different goals, salaries, work ethic, and other factors that play into their finances. A financial plan that might work for one person isn’t necessarily going to work for you.
While you can follow best practices that we’re going to lay out below, you might find it is time to work with a professional. Working with professionals like Matt Dixon of TruNorth Advisors can help you build a customized approach to help you achieve the goals you set together.
Can I Depend on Social Security?
While we pay into social security during our lives, some people opt not to count it for the money they’ll have for retirement. Many believe that the money from social security won’t be around when it comes time for their retirement.
If you don’t count social security toward how much money you’ll have coming in during retirement, that means you’ll need to save even more.
What Lifestyle Do You Want to Live?
Depending on what lifestyle you plan on living, you are going to have to adjust your saving goals. If you save money for 40 years, you could comfortably maintain your current lifestyle just by saving 15% to 20% of your pre-tax income.
Keep in mind that when you retire, you’ll have more time on your hands. There will likely be things you want to go do and see that are going to cost money. Knowing how you want to live and the things you want to do during retirement will give you an idea of the real number you need to save.
Saving to Maintain Your Current Lifestyle
If you do decide you want to save to maintain your current lifestyle, let’s work with the number 15% to 20% of your pre-tax income. If you need to save that much money, what can you do to make sure you are on track?
If you think you have plenty of time to save money for retirement, you need to reevaluate. It’s never too early to start saving money. The earlier you start saving money, the more time your money has to grow.
Compound interest can work wonders for your retirement savings. Learn more about how it works and how much more money you can make if you let your money compound in an investment account over a longer period of time.
Don’t Retire As Early
If you didn’t start saving for your retirement early, there is another option to make more money with compound interest. Instead of retiring at 67, try retiring at 70 or even later.
The longer you wait to cash in on your retirement funds, the more cash you’ll have to last you throughout your retirement. Our lifespans are getting longer, and if you can hold off on retiring, it will help you ensure you live comfortably until your last days.
Look Into Ways to Automate Savings
Saving can be difficult for anyone, and if you’re thinking about saving money for 40 years in the future, it can be frustrating. You think of all the things you could do now if you used the money and it’s tempting.
One of the ways to keep yourself from using money meant for retirement is by automating savings. You can set up a certain percentage of money that goes directly to your savings account each time you get paid. This is the least painful way to stay on track when you’re saving.
Savings Boosting Hacks
If slow and steady isn’t your speed, there are some things you can do to get your savings to where you want them to be. If you’re ready to get extreme, it’s amazing how quickly you can achieve your goals.
Cut Your Spending
Entertainment costs, eating out, and unnecessary buys eat a great deal of your income. Cutting spending on everything that isn’t essential will allow you to supercharge your saving power.
Increase Your Income
If you’ve already cut your spending as low as you can go, increasing your income is another good way to boost your savings. You might take on a second job or do some side gigs and put all of that money into your savings.
Do Something Radical
Maybe you still aren’t getting the results you want. You can do something that most people will think you’re crazy for doing.
Sell anything that isn’t necessary. Do you have a second car? Maybe you own a lot of expensive tools, tons of clothes, and other things you never use.
Sell off everything you don’t need, downsize, and boost that retirement fund before you start buying anything else.
How Much Do I Need to Save? – Now You Know
Now you know the answer to “How much do I need to save?” You can start working on your retirement even more than you are to achieve your goals faster.
Do you feel like you need more help understanding personal finance and doing the planning? Our site is full of articles that can help you as you’re building a strong financial future.
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