5 Things Preventing You From Saving for Retirement — and What to Do About Them

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If you aren’t saving enough for retirement — and the vast majority of us are guilty as charged — a few simple changes might be all you need to get back on course.

Remove just one or more of these obstacles and bad behaviors, and you could potentially add tens of thousands of dollars — or even much more — to your retirement savings over time.

Following are five small things that might be preventing you from saving enough for retirement.

1. You eat out every day

Do you have a favorite restaurant or coffee shop that you visit every day? Perhaps it should have a slogan above the door aimed at you and other future retirees: “Abandon hope, all ye who enter here.”

Mindless daily splurges can be devastating to your financial future. For one, the average American household spends $3,424 eating out each year, according to the latest numbers from the U.S. Bureau of Labor Statistics.

That sounds expensive. But the real cost is worse, as you’ll see when you run the numbers: If you invest $3,424 over 40 years at a 7% annual return, you’ll have nearly $800,000. That’s what you’re wasting on sandwiches and lattes.

Feeling a touch of indigestion? Feel better by starting now to trim that tab. Cut restaurant and coffee spending by $1,000. Invest the $1,000 savings. If you earn a 7% return, you’ll have around $200,000 after 40 years.

2. You pay the minimum due on your credit card

Which of the following statements is true?

  • A. Compound interest is a wonderful thing: It can make you rich over a lifetime.
  • B. Compound interest is a terrible thing: It can condemn you to poverty forever.

It’s a trick question: The correct answer is C, both of the above.

Compound interest can work wonders for savers and investors, turning a pittance into a goldmine over long periods of time.

And it does the reverse for those who are in debt. In fact, a high interest rate on a debt makes the debt grow faster over time.

As Debt.org points out, if you make a minimum monthly payment of 4% on $5,000 of credit card debt, it will take you nearly 11 years to pay off your debt — and you will have paid $2,627 in interest.

Never pay just the minimum amount.

As we have stated in the past:

“While paying the minimum payment each month will keep the card companies happy, it’s a counterproductive way to pay off debt because you pay far too much in interest.”

3. You fail to plan ahead when shopping

If you looked out your window and saw money falling from the sky, your first thought would probably be, “Wow, that’s weird.” Then, you’d surely scramble to grab a bucket and head outside to harvest the miraculous bounty.

Yet every day, we pass up opportunities to save money that are even easier — and a lot more realistic. All it takes is a little planning to reap the benefits of these surefire ways to save.

For example, when you make a purchase through a cash-back portal like Rakuten, formerly known as Ebates, a small percentage of the sticker price goes back to your wallet. Compound those savings by paying with a cash-back credit card or a discounted gift card.

Save more by checking out “3 Websites That Pay You for Shopping” and “5 Tricks to Get Discounts on Everything You Buy in Stores.”

Pledge to take these savings and apply them to your retirement kitty.

4. You earn too little

Some people just don’t make enough money to save. That’s the sad-but-true fact.

The good news: You are not condemned to this fate. If your wallet or purse doesn’t have enough jingle, fix the problem by boosting your income.

For starters, ask for a raise at work. If the prospect of demanding more money makes you nervous, calm your fears by reading “10 Tips to Remember When Asking for a Raise.”

If you don’t get the salary hike — or even if you do — consider developing a side hustle to earn extra cash. Every dime you save now can become a dollar or more to have in your golden years.

For more ideas, check out:

5. You fear taking an informed risk

Some people love the kick of riding a motorcycle. Others get a buzz from skydiving or rock climbing. But even these thrill seekers typically hate one type of risk: putting money on the line.

The instinct to keep our hard-earned cash safe runs deep in our bones. Some of us avoid saving for retirement because we fear the ups and downs of the stock market.

But to build a nest egg big enough to sustain you through retirement, you’ll need to take some judicious risks.

“Not taking any risk at all is taking a risk,” as MoneyTalksNews founder Stacy Johnson says. That’s because inflation eats away your principal unless your savings are outpacing it.

Bull and bear markets come and go. Over time, the stock market handsomely rewards those who invest and stay the course, Stacy says. For more, check out “2-Minute Money Manager: I’m Retiring Soon — How Should I Invest My Savings?

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