Saving for retirement can become a lot like paying a bill once your final day at work inches closer.
It may seem like no matter how much money you set aside, the additions to your retirement account are slim to none.
But don’t waste your precious time worrying.
I have 3 simple ways to add $113,000 to your retirement fund without increasing how much you put in.
I hope you’ve never woke up in a cold sweat because nightmares about running out of money plague your sleep.
The reality of retirement is spending the last few years of your working capability frantically saving for when there’s no day job on your calendar anymore.
Unfortunately, the possibility of running out of funds over the last few decades of your life is a very real fear.
The reality of the situation is that 1 in 3 working Americans have saved less than $5,000 for retirement.
Think about how much your salary is now. If you stopped working today with only $5,000 in the bank, how many months would it last?
I’d be surprised if you said one.
I don’t mean to be the bearer of bad news, but in order to realistically start saving for retirement, you have to be aware of what you’re up against.
That being said, I didn’t bring the rainclouds without the promise of an umbrella.
I’ve discovered a new way to add tons of zeroes to your retirement account. And getting to that point just got a whole lot easier.
Here are 3 simple ways that you can start to see your contributions multiply (instead of inch along) as you save for your golden years.
1. Avoid unnecessary fees whenever possible.
It goes without saying that everything is expensive.
Saving shouldn’t be, but with all the paperwork, rules, and regulations involved in investment accounts, someone somewhere was bound to make money off of them.
Most retirement accounts charge exorbitant fees for ‘services’ ranging from record-keeping to fund-related expenses, to annual charges.
Some are unavoidable, but the ones that are unnecessary should definitely not fall on you.
If you can, move your savings into lower-cost accounts. Index funds are a good example.
They passively track a part of the market, and because they’re so passive, account managers can’t ask you to cough up cash for them.
Now, if you’re stuck investing through your employer’s 401(k) and they’re sticklers for high-fee accounts, look into rolling over to an IRA.
Although IRAs still charge fees, they’re often not as high as those of a 401(k).
Once you’ve gotten rid of the pesky fees eating away at the edges of your profits, you’ll find quite a difference in your account balance.
2. Start saving right now.
Even if you’re 20, 30, 40, or 50, you should be saving for retirement.
You may think I’m extreme but think about it. Would you rather set aside a little money for 50 years or a lot of money for 5 years?
Your call, but your paychecks will go a whole lot farther if they don’t get eaten by your famished retirement account.
Also, the longer sums sit in the account, the more likely they are to compound.
That means that small contributions can become thousands of dollars after the test of time.
For example, say you contribute $100 a month for 30 years. That’s $36,000. But with an annual rate of return at 7%, you’ve made $113,000.
One hundred dollars a month is one less dinner at a restaurant, one less concert ticket, three less tanks of gas. Those small sacrifices can mean a six-figure addition to your retirement (AKA vacation) fund.
3. Add contributions on a strict schedule.
Just like saving sooner rather than later helps, saving on a regular basis can make a world of difference.
Kind of like ripping off a band-aid, if you immediately put a set amount of money into your 401(k), you won’t even have the chance to miss it.
Think back to when you made less money than you do now.
Sure, you maybe dreamt of buying expensive clothes and driving a fancy car, but you lived without the extra money.
In order to protect your future, consider retirement to be the next expensive thing you buy yourself. You have to save first.
I’ve never understood the saying “I’ll relax when I’m dead.”
I mean, the sentiment is there, but I’d prefer to say, “I’ll relax when I retire.”
Make sure your retirement is as relaxing as you deserve. Treat future you with smart decisions today.