Year after year we see the same scary statistics about the state of retirement savings in America.
According to the Employee Benefit Research Institute, nearly a quarter of households have less than $1,000 saved for retirement and nearly half of everyone surveyed had accumulated less than $25,000.
Hopefully your situation is better than that. However, even if it is, you might still be worried that your plan is insufficient and might feel powerless to improve it.
It’s that sense of powerlessness that we addressed on a recent episode of "The Income Generation." I’m going to share some tips that can help you jumpstart your retirement savings.
First, let’s address some of the reasons why many Americans’ savings might need a jumpstart.
Not surprisingly, the most common reason people give for not saving more is that their day-to-day expenses eat up any extra money they could invest for retirement.
Making matters worse, until recently wages have been largely stagnant for many Americans, while the cost of living has continued to climb. But these aren’t the only reasons.
The truth is, plenty of people earn enough to save, yet they simply don’t make it a priority. Another common hurdle is that some people may hear talk about how $1 million is the minimum you should have saved for retirement and think: “I’ll never make it to that, so why bother trying?”
These are all real issues, but no matter your current financial situation, there are steps you can take to make improvements.
Obviously, the sooner you start, the better. If you’re in your 50s or early 60s, it might feel like it’s too late, but that doesn’t have to be the case. If you’re in your 40s or early 50s, you still have plenty of time—but you must start now.
The best place to start is with a budget. To really get a handle on your expenses and have any chance of earmarking money to set aside for retirement, you need to do a monthly budget.
Seeking the guidance of a financial advisor early in the process of retirement planning is another essential step.
Do you have a rainy-day fund? If not, establishing one is a must. Ideally, you should have about six months’ worth of living expenses on hand in a savings or money market account that you could tap into if needed.
Not having a rainy-day fund increases the odds you’ll turn to credit cards or other forms of debt when an emergency arises. Even though interest rates are low right now, increasing your debt will not help repower your retirement savings; it will do the opposite.
With that in mind, make paying down your debt a priority. As you pay down your credit card balances, it’s important not to incur new debt in the process.
That said, you should not defer building up your retirement savings until your debt is paid off. The two should go hand in hand.
While these are broad, long-term strategies to jumpstart your retirement savings, there are things you can do right away to improve your ability to save.
For example, check your bank account and credit card statements for any unnecessary spending. Look for automatic charges coming from service providers you are no longer using. This is a common problem, and collectively, these fees can add up.
These are just a few ideas. If you want to learn more, you can watch the Jumpstart Your Retirement Savings episode on "The Income Generation Show"’s YouTube channel—where I share 10 Essential Steps to Prepare for Retirement.
David J. Scranton, CLU, ChFC, CFP, CFA, MSFS, is a nationally renowned money manager, Amazon Bestselling author, national TV host of Newsmax TV's "The Income Generation," founder of Sound Income Strategies, LLC, and CEO and founder of Advisors’ Academy. With over 30 years of experience in the industry, Scranton specializes in income-generating savings and conservative investment strategies.
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