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Half of Americans Aren’t Saving for Retirement. Here’s How to Do Better

By Maurie Backman – Apr 21, 2018 at 6:28PM

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No money in your nest egg so far? It's time to change your habits -- immediately.

We're told we're supposed to consistently set aside money for the future to avoid running out of it in retirement, but only half of U.S. workers are heeding that advice. New data tells us that 49% of Americans actively are saving for retirement -- which means that half the workforce is at risk of retiring broke. Worse yet, only 16% of workers are very confident that they'll have enough in their nest eggs to cover their future expenses.

If you've been in the non-saver camp thus far, you should know that the longer you wait, the more growth opportunity you'll miss out on for your money, thus lowering your chances of retiring comfortably. Rather than go down that dangerous road, you can eke out some savings and avoid poverty during your golden years by incorporating the following tips into your lifestyle.

Woman at a laptop with papers in front of her, holding her head

IMAGE SOURCE: GETTY IMAGES.

1. Rethink your budget

It's estimated that 75% of Americans live paycheck to paycheck, which means they're budgeting all wrong (if at all). If your retirement savings are non-existent, it's time to play around with your expenses and start cutting corners to free up more cash.

You can approach this in a number of ways. Your first option is to take one major expense, like housing, and reduce it drastically. Downsizing to a smaller house or relocating to a more affordable neighborhood could easily put $500 or more back in your pocket each month depending on where you live, and that would leave you with $6,000 a year to contribute to a retirement plan.

Your second option is to leave your major expenses alone, but make smaller changes that collectively free up a decent amount of cash. For example, if you're currently spending $300 a month on restaurants and takeout meals, cooking those meals yourself will save you roughly $225 based on the markups food establishments charge. Similarly, if you give up your $50-a-month gym membership, downgrade your cable plan by $25 a month, and stop spending the $200 a month you normally spend on needles gadgets and clothing, you'll achieve a similar effect. It doesn't really matter which expenses you choose to cut, as long as you make some changes.

2. Get a side hustle

Maybe you're not indulging in a nice apartment, restaurant meals, cable, and a gym membership and truly are just getting by. If that's the case, but you're serious about saving for the future, a side hustle might be the solution. The beauty of side-hustle income is that it's not money you were counting on, which means you have no excuse not to save it as it comes in. Furthermore, if you'd rather minimize the extent to which you need to cut expenses, a side hustle might allow you to maintain more of your current lifestyle while still making a respectable dent in your savings.

3. Bank your bonuses and raises

If you're lucky enough to get a raise or bonus at work, you're looking at a prime opportunity to boost your nest egg without having to lift a finger or deprive yourself of any of life's luxuries. As is the case with a side hustle, the money you receive via a bonus or raise isn't money you were used to living on, so you should have no problem pretending it doesn't exist and setting it aside for the future.

A little bit each month will go a long way

If you're used to saving nothing for retirement, you may be wondering how on earth you'll ever get to a place where you have a decent nest egg. But if you're still fairly young and have many working years ahead of you, you can turn a series of modest contributions into a rather sizable sum.

Imagine you're 30 years old without savings and are willing to work until 70. If you set aside a mere $100 a month over the next 40 years and invest it at an average annual 7% return -- which is actually a bit below the stock market's average -- you'll be sitting on about $240,000. Make it $200 a month and you'll have close to $480,000 to work with.

You don't need to save half of your income to ensure a financially secure retirement, but you do need to do better than nothing. And the sooner you realize that, the greater your chances of retiring with enough money to live comfortably.

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