Nobody likes the idea of putting away lots of money that they won’t see for possibly many years.
So what can you do to still have a sufficient amount saved for retirement, but save less money at the same time?
The Early Bird Gets The Worm
The sooner you start contributing money to your retirement savings the less you’ll need to save. There is the magic of compounding along with the increased value of stocks and other investments over time. Optimally, you should begin saving for retirement when you get your first real job.
The largest obstacle with starting to save for retirement so early, is that retirement is so far away. It can be hard to remain dedicated (or even start) when it feels like it will be forever until you retire. Over the long run though, you’ll have more money to spend enjoying life because you’ll need to save less money for retirement.
Be Aggressive, Be-Be Agressive
The more risk you take in your retirement portfolio, the higher the chances of larger returns. Larger returns would equal more money, thus less money you’ll have to contribute to your retirement.
Of course, this one could also backfire on you. The other side of aggressive investments also means that you’re risking your money. Things could take a turn for the worse and your money would disappear. Usually the younger you are, the more risk is suggested and it slowly turns more toward conservative investments the closer you get to retirement age.
Everybody’s comfort level for risk is different, so make sure you understand what you’re risking before jumping the gun.
Hello Free Money!
If your company offers a 401k match of any kind, get hustling. 401k matches are essentially free money into your retirement account. Many companies offer 100% matches on the first 5% you contribute. What this means is:
If your pre-tax income is $40,000 a year, you contribute 5% ($2,000 year) and your employer puts in 5% ($2,000) of free money into your retirement account. Your $2,000 has now instantly doubled to $4,000. It doesn’t get better than that.
If your pre-tax income is $80,000 a year, you contribute 5% ($4,000 year) and your employer puts in 5% ($4,000) of free money into your retirement account. Your $4,000 has now instantly doubled to $8,000.
If your pre-tax income is $120,000 a year, you contribute 5% ($6,000 year) and your employer puts in 5% ($6,000) of free money into your retirement account. Your $6,000 has now instantly doubled to $12,000.
Pretty awesome right. Plus over time, that money can grow into even more money…especially if you start early.
Are you using any of these to save less for retirement?
Do you have another tactic?