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Upping Your Retirement Contributions by Just $83 a Month Could Have a Huge Impact on Your Financial Security

By Christy Bieber – Updated Aug 4, 2020 at 7:55AM

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It's not alot of money, but it can add up!

Often, when you think about saving enough for a secure retirement, achieving your goals can seem insurmountable. You need to have a substantial sum invested, and to amass it, you may need to save around 15% of your income. This can seem impossible if you're just getting started or have a lot of bills to pay. 

But it doesn't take a lot of extra money to make a big difference in how much you end up with for retirement. So while your ultimate goal should be to work up to saving that recommended 15% of income, you can start with a small lifestyle change, like saving just $83 a month. It can get you a lot closer to a secure retirement than you might think.

Faucet full of coins with money pouring out.

Image source: Getty Images.

How much difference does $83 a month make?

Investing an extra $83 a month would give you close to $1,000 invested by the end of the year ($996 to be exact). And with compound interest, that $1,000 could grow to a substantial sum by retirement age.

The specific amount that your $83 monthly investment turns into will vary depending how old you are when you start. The table below shows how much you'd have by the age of 65 depending on when you start saving and assuming an 8% average annual return on investment. 

If you start saving an extra $83 per month at: It becomes this much by 65:
25 $259,078
30 $172,331
35 $113,293
40 $73,112
45 $45,766

Table calculations by author.

While this may not seem like a ton of money, consider the fact that the median retirement savings balance among baby boomers was just $144,000, according to a recent study. If you start saving your extra $83 early, this contribution alone could give you more than many people have in retirement or close to retirement age. 

And even if you don't start saving your extra $83 per month until you're 35, that extra $113,293 in your nest egg would provide just over $4,500 more retirement income each year (assuming you follow the 4% rule).

If that doesn't seem like much, consider that mean consumer spending by Americans 65 and over was around $50,860 annually in 2018 (the most recent year for which the Bureau of Labor Statistics has data available). So the extra $83 you invested could give you enough to cover close to 9% of your household income at that spending level.

It's worth the effort

An extra $83 a month in a retirement savings account isn't impossible for most people, although those facing financial hardships due to the coronavirus may need to wait until the economy gets back to normal.

But if you're still working or you have any spare cash left from unemployment benefits after paying the bills and shoring up your emergency fund, you should aim to boost your savings if you can. Cutting a few small expenses by skipping a restaurant meal or two, canceling cable, or reducing your cellphone bill could provide that little bit extra. And as you can see, the money really adds up over time, helping you become a much more financially secure retiree. 

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