1 Simple Way to Save for Retirement

Building a viable retirement nest egg requires two things: Living below your means and investing money via an automatic savings plan.

Jul 20, 2014 at 8:50AM


Photo credit: www.SeniorLiving.Org

It sounds easy in theory, but saving for retirement is hard. Most of our needs are immediate so it seems silly to devote resources and money toward needs 10 to 30 to 50 years away.

Building a nest egg for you and your family is harder than just skipping that $4 latte or packing your lunch -- it takes repeatable and systematic habits. One of those good habits is setting up an automatic savings plan. We asked three Motley Fool contributors to give their opinons on this method and how it can help people secure a more comfortable retirement.

Jessica Alling: The most essential step for boosting your retirement savings is making sure you've got the money available in the first place! And as much as we all may hate it, budgeting is at the core of any successful savings plan.

Since expenses vary each month, budgeting can be difficult even if you monitor your habits. One of the easier approaches uses percentages to encompass big expense categories, instead of focusing on each separate expense.

Often called the 50/20/30 rule, this type of budget splits your monthly income into three categories: fixed expenses, financial goals, and flexible spending. Monitoring 20% of your income each month, specifically aimed at financial goals, you're more likely to see opportunities to increase your savings and investment accounts.

Kingkarn Amjaroen: Saving money for retirement can be significantly easier if you follow a very simple set of rules. Building a viable retirement nest egg basically requires only two persistently applied actions: Living below your means and investing money via an automatic savings plan.

In terms of investing money, it is highly advisable to have a certain percentage, say 10%, of your monthly income or paycheck automatically deposited into a savings or retirement account. That way, saving is done on a persistent, conceptual basis, but it doesn't feel like a chore hanging over your head every month.

Automatic monthly savings simplify a retirement strategy, a task which can seem daunting, while investors also benefit from the long-term powers of compounding interest through buying and holding shares of great companies or an index fund. The power of compounding is substantial and should never be underestimated, especially over long time horizons.

Implementing an automatic savings plan is both prudent financial planning and putting retirement savings on auto-pilot.

Anna Wroblewska: I love automation! 

Habits are so effective because they don't require thinking, decision-making, or willpower. So, to accomplish anything difficult that normally requires thought and action, automate. Automate everything you possibly can: It's the only way.

I recently read that one way to ensure you're always saving is to set up an automatic deduction of as little as $20 a week from your checking account to a savings account or IRA. It's a small enough amount that you won't really miss it, but it adds up over time. You can obviously do more or less -- just as long as it's something. And just so long as you don't have to remember to do it.

How to get even more income during retirement
Automatic savings plays a key role in your financial security, but it's not the only way to boost your retirement income. In our brand-new free report, our retirement experts give their insight on a simple strategy to take advantage of a little-known IRS rule that can help ensure a more comfortable retirement for you and your family. Click here to get your copy today.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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