Some people hope to retire early. Others expect to retire a bit later, while still others worry they’ll never be able to quit working.
Wherever you fall on this spectrum, chances are good that you would worry less if you could just save a little more. Fortunately, that’s possible if you’re willing to develop a few good habits.
Following are some ways to pile up cash before you retire.
1. Make it automatic
Don’t wait until you have “extra money” — there’s no such thing. Find an amount you can save, even if it’s just a little, and get started.
The single best thing you can do is automate. That means having money automatically transferred from a paycheck or checking account into savings. Start with the max you think you can afford. If you guess wrong, you can always reduce the amount later.
Consider your retirement savings as an obligation, no different than any other bill. Because unless you plan on working until the day you die, that’s exactly what it is.
2. Spend less with a budget
Does $650 a year sound like a lot to save? It’s actually just $12.50 a week — the equivalent of a meal out or a few coffees.
Where do you find extra money? Start by seeing where your money is going now. Track your expenses, then categorize them with a simple spending plan.
Once you learn what you’re spending on, you’re likely to see places you can save a buck or two. Take those savings and divert them to retirement savings.
For more tips on building a budget, check out YNAB (You Need A Budget), a Money Talks News partner that helps you spend and save more wisely.
3. Destroy debt
Every dollar you pay in interest on a debt is a dollar that won’t be making your golden years gleam. List your debts, and choose one to focus on. When it’s gone, add the amount of those former payments to paying down the next debt on your list.
Find whatever extra money you can wherever you can and increase your debt payments — always pay more than the minimum.
Remember, minimum payments are designed to benefit lenders, not you. Your credit card company doesn’t care when, how or if you retire. Borrow as little as possible, and never for things that go down in value.
For more tips, check out “10 Ways to Lose Weight and Pay Down Debt — at the Same Time.”
4. Explore a 401(k) and other retirement plans
If your employer offers a retirement plan, take a look, especially if the company matches your contributions — a rare opportunity to double your money for nothing.
Your employer can take your contribution straight out of your paycheck and put it aside. That will also lower your tax liability, because you won’t be taxed on the money in your plan until you take it out in retirement.
If your job doesn’t offer a retirement plan, create your own with an individual retirement account (IRA). And once you reach age 50, take advantage of the higher “catch-up” contribution limits available to you.
5. Earn more on your savings
Keeping your money in low-yield bank accounts is safe, but that protection comes at a price. Your money won’t grow much, and could easily lose purchasing power to inflation over time.
Too many people are fixated on working hard for their money, rather than making their money work harder for them.
How do you earn more than the measly interest rate available at the bank? Explore alternatives, from stocks to real estate. If you are considering the latter option, check out Fundrise.
6. Make more
What you earn now influences what you can put away for later. In addition, Social Security benefits are related to lifetime earnings. So, making more today will mean bigger Social Security checks tomorrow.
No matter who you are, there are ways to make more money. That’s true even if you already are retired and want to make a few more dollars on the side. For more, check out “11 Overlooked Ways Retirees Can Make Money.”