Most everyone understands the importance of setting aside money today to build wealth for your retirement in the future – but that doesn’t mean that everyone has put an action plan for retirement in place already and is working towards building their financial future right now.
In fact, study suggests that the overwhelming majority of people understand how important retirement is but have yet to start saving. That’s not only going to create a huge problem in years to come (mostly because of the way that compounding and investing works), but it’s really going to put some mental strain and anguish on you right now in the present, too.
Thankfully though, you’ll be able to start saving for retirement a lot sooner than you might expect. In fact, a lot of people wondering “can you afford to save for retirement right now” will be pleasantly surprised to learn that they can – even if their budget doesn’t have a lot of room for extra savings.
Here are a couple of tips and tricks to help you maximize your retirement savings and investments right now.
Avoid lifestyle creep
It’s really easy (REALLY easy) for your lifestyle to expand as your income does.
There’s always going to be that temptation to get a bigger place, a nicer and newer vehicle, or spend more money dining out and buying gifts when you have a little bit more cash coming in. But if you’re able to resist those temptations as much as possible – and instead start to save or invest that money for your future – it doesn’t take very long to build up a retirement nest egg that can change your life forever.
Compounding changes everything
Far too many people are told that they should be saving for retirement when in reality they should instead be investing for their retirement – taking advantage of the law of compounding interest and capitalizing on all the benefits it brings to the table.
The sooner you start investing for your future the better off you are going to be. For example, if you’d like to save $1 million for your retirement you could begin at the age of 25 setting aside $287 per month and hit that number when you reach the age of 65 (as long as you got 8% return on average every year).
Wait until you hit the age of 40 to save that $1 million for retirement and you’ll have to put aside $1055 per month to achieve that same goal at that same age (and with that same annual compounding interest rate) – which becomes a whole lot harder to do than saving a little less than $300 a month.
Start a side hustle
A lot of people today are saddled with more debt than ever before and feel like their day job just isn’t bringing in enough money each month to leave anything left over that can be saved or invested in retirement.
Thankfully though, in large part because of the “New World” of business – and the internet in general – it’s easier than ever before to create a small side hustle that you can generate income from almost overnight.
Think about the unique skills, talent, and interests you have that can be monetized and find a way to start small. You may only be able to bring in a few hundred dollars a month (or maybe a few thousand) at the start, but if you funnel all of that into your retirement savings or your retirement investment accounts you’ll be in much better shape than you would have been otherwise.
You have a unique choice here. You can spend a few hours every day binging the latest shows on Netflix or that same amount of time building up a side hustle, generating another income source, and making money for your retirement.
The choice seems pretty easy when it’s laid out like that, doesn’t it?
All things considered, the reality of the situation is that while the best time to start saving and investing for your retirement was yesterday the second best time to get started is today.
Be strategic, be smart, and be intentional in the decisions you make when planning for your retirement savings and investing in your find things sort of take care of themselves (provided you give yourself enough time going forward).