The procrastination struggle is real. We put off cleaning the toilet, getting the oil changed in the car, and organizing our financial documents. But perhaps the biggest thing we wait on is saving for retirement.

According to Fidelity's 2020 Retirement Savings Assessment, 46% of working American households are at risk of not being able to fund their current lifestyle in retirement. Of that 46%, more than half are likely to need significant downsizing once they leave the workforce. That downsizing may involve relocating to a cheaper area or moving in with family, selling assets, and slashing spending on entertainment. None of that sounds like a proper reward for years of service in the workforce.

Older man reviewing paperwork while on the phone

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The culprit is insufficient savings. Saving money is notoriously hard for American households. It seems there's always a more pressing or more interesting use of cash than tucking it away in your retirement accounts.

The challenge is that when you put off saving, it gets harder and harder to catch up. And then one day you're 55 and realize you waited too long. You're not alone in that experience, and the Fidelity report confirms it. But there's no time for regret, because you've got work to do. Take these four steps today to minimize that downward lifestyle transition tomorrow.

1. Know your finances, inside and out

Start accounting for every penny you earn and spend. You need to establish your financial baseline, and that involves knowing what you spend on your bills and your non-essential purchases.

Try exporting your banking transactions daily or weekly to a spreadsheet and then keeping notes in that spreadsheet. Your notes should include a category for each purchase and a reminder of why you made the purchase. Start totaling up the categories to see where the bulk of your money is going.

You'll find this exercise naturally makes you more aware of your purchases and also more attuned to savings opportunities. Think of it this way: Each transaction has to be worth the time you'll spend reviewing it. That alone might keep you from mindlessly purchasing a diet soda at the gas station.

2. Downsize your expenses

Now it's time for some pre-emptive downsizing. If you're facing a downward lifestyle move in retirement, you may as well get ahead of it while you're working. Plus, lowering your expenses immediately frees up cash for your savings.

The deep-dive into your spending will point you to your best options for downsizing. You might see that you can easily cut $500 from your entertainment budget. Or, you might realize that you're strapped, thanks to that huge mortgage payment. Common places to look for savings include:

  • Rent or mortgage. Could you move to a smaller place? Or, could you live with a family member temporarily to maximize your savings while you're still working?
  • Cars. This is a tricky one. Once you retire, you probably can't afford a new car -- so you don't want to trade in a reliable car now for a junky one. But if you're driving a sports car that's pricey to insure, you could downgrade to something less flashy.
  • Groceries and dining out. Pack your lunch, buy food that's on sale, clip coupons, choose the generic brand, and set a limit on meals out.
  • Entertainment. Cancel all but your most-watched streaming service. Take leaner vacations. Invite friends in and learn how to cook meals from a handful of ingredients.
  • Shopping. Cancel Amazon Prime if you're a one-click junkie. Remove credit cards from your wallet if you like to shop for fun. You can still shop, you just have to cut back on the buying.

3. Set an aggressive savings goal

You know your spending, and you've identified places to cut back. Challenge yourself to a big monthly savings number. This is your most impactful retirement planning strategy at this point, so don't pull any punches.

Take advantage of catch-up contributions, too. These are increases to the mandated contribution limits on 401(k)s and IRAs for savers aged 50 and over. In 2020, you can put up to $26,000 in a 401(k) including those catch-up contributions. The limit for IRAs is $7,000, including catch-up contributions.

4. Develop other income sources

Now's the time to identify ways you can supplement your income in retirement without having to work too hard for it. Dividends and interest are the ultimate in passive income, but they require cash.

If you have good credit, you may be able to finance income-earning real estate. You can explore single-family rental homes for sale on Roofstock, for example. Don't walk into this lightly, however. Work with someone you trust who can help you project cash flows to make sure the deal works for you.

You could also rent out your assets. These days, there are many specialized peer-to-peer renting websites beyond Airbnb. Try Set Scouter to rent your home to film crews, Spacer to rent your parking space, RVshare to rent your recreational vehicle, and Turo to rent your car.

It's not too late to save

The only remedy for procrastination is action. Get your head around your spending, find ways to free up cash, refocus on your savings, and explore new income opportunities that can keep you afloat. You can minimize that downward transition, but you have to start the work today.