One of the keys to retiring richer is to be financially savvier and find plenty of resourceful and cunning ways to keep more of your hard-earned cash, which can then go towards your retirement plans.
From making the right choices such as choosing one of Chase’s newer credit cards for the points benefits attached to it, to scrutinizing your discretionary spending to see where cuts could be made, there are plenty of ways to feather your retirement nest more comfortably.
A million in mind
If you want a nice fat round number as your retirement target figure, how does one million sound?
You may be surprised to discover that many workers have the opportunity to accumulate that magical million-dollar figure by the time they retire, if they apply the right financial skills to their financial resources and save consistently from a young adult age.
If you are just starting to think about retirement properly after twenty years or so of relative inactivity from a savings perspective, you will have your work cut out achieving this dream retirement figure, but it is never too late to develop some good financial habits.
If you start saving from the age of 25 and manage to put aside $4,830 each year in savings, you have a good chance of getting to $1 million by the time you reach 65, given average returns of about 7% per year.
If you wait until you reach the age of 40 before starting to save for retirement, you would need to save just over $15,000 per year to reach the same $1 million target, so you can see that the clock is ticking every day you procrastinate on your retirement plans.
A perfect match
A great way of significantly improving your wealth in retirement is to get a 401 (k) match from your employer.
For example, if you can get an annual match of just $1,500 from your employer, this could help you reach a savings target of $1 million in 35 years, with $5,475 of your own cash going into the 401 (k) pot.
It is always a good idea to get professional advice on your retirement scheme options and the specific details of your own employer’s scheme, but in general terms, matching is a great way of boosting your savings in a tax-efficient way.
If you are raising a family, you won’t need to be told what a drain on your finances this can be.
Not that you would change anything of course, but once your children are grown up and leave the nest, this represents a real opportunity to make up for some lost time and concentrate on putting away money for retirement.
Many parents find that they don’t have a lot of spare money when their children are in education, but don’t think that you have missed the boat when it comes to a comfortable retirement, as you should still have time to make a difference, if you concentrate on investing that cash that is now free, into your own future.
Finding that extra cash
The trick to accumulating more cash is to find some resourceful ways to generate more free money just by changing a few habits and adopting a few financial tricks to save money.
Simple ideas such as adopting a less aggressive style of driving can boost your bank balance. By easing off the gas and driving more sedately, you will not only perhaps be a bit safer behind the wheel, but you could also save about $600 a year on average, which could go straight into your savings.
Shopping for groceries is where a lot of our household budget goes. Resist the temptation to shop with your stomach or your eyes when you see a tempting treat. Go to the store with a list of what you need and stick to it. You will probably be amazed at how much less you spend that way.
If you are a smoker, you already know that it is not good for your health, but it is a habit that is also really bad for your wealth. A typical smoker will spend about $2,500 a year on their habit and if you manage to stop and put aside the money in savings instead, that would give you about $280,000 over 30 years.
These are just some examples of how simple it can be to find some extra cash, which you can then put towards your retirement plans, so take a look and see where you can reclaim some of your hard-earned money.
Lucy Arnold has worked as an accountant for many years. Too often she sees people come to her who are nearing retirement age and who have saved nothing, or very little. It’s her mission to education people and help them have some funds for retirement. Look out for her articles on personal finance blogs.