Finding Ways to Set Money Aside Now
The main reason people put off saving for retirement is that they think they have plenty of time to do that later. The second most popular reason for putting it off is that most people don't know how to come up with money to put into savings.
If you've read any of the previous sections, though, you can probably come up with a variety of ways to find $50, $100, or $200 a month for retirement savings. Use WORKSHEET 21-2 at the bottom to brainstorm ideas, and review the following sections for some creative ways to save more for retirement.
Stop Eating Out
If you eat take-out twice a week, and you pay $12 for a meal that you could make for $3.50 at home, you could put about $72 a month into your retirement savings. Over 20 years at 5 percent, that's $33,266.94.
Cut Your Clothing and Shoe Budget in Half
If you spend $1,000 per year on clothing and shoes, can you cut that amount in half and put $500 a year ($42 per month) into a retirement account? Thirty years of that at 6 percent, and you'll have $42,189.63 to retire on.
Move to a Smaller House
If you're currently living with two other people in 2,400 square feet, could you move to a house with 1,800 square feet and still be comfortable? If so, your mortgage payments might go down by anywhere from $300 to $1,000 per month, money that you could put into a retirement fund. In just 15 years at 6 percent, a $600-per-month savings will equal a whopping $157,382.85.
Drive Your Car Twice as Long
Another way to get more money for retirement is to refinance your mortgage when interest rates decline. For the cost of closing the loan, you might be able to find an extra $50–$150 per month for your retirement savings. Just don't increase the length of the loan, though or you'll sacrifice your long-term financial health.
If you currently get a new car every three years, pay it off, and get another new one, try something different: Pay off your car in three years but drive it for six.
Put the amount of your car payment into a retirement account for the second three years. You'll only contribute to your retirement account three years out of every six, but you'll have found a creative way to save.
Start a Part-Time Business
Instead of looking only at potential expenses to cut, consider working a few extra hours per week, perhaps at your own business, and putting that income toward your retirement savings. Find some tips on how to earn a bit more money than you're making now.
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