Most people don't know how much they need to save for retirement, but many are pretty certain they're not saving enough. Finding extra cash to save toward retirement isn't always easy, and it often seems like you need to set aside hundreds or thousands of dollars to make any real difference. But small contributions made regularly begin to add up over time, especially if you start while you're young.

The difference an extra $50 per month can make

To illustrate this, I looked at the difference an extra $50 a month could make to a person's retirement savings over 20, 30, and 40 years. In all cases, I assumed a 7% annual rate of return on investments. 

Hand stacking coins

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Let's start with the obvious: If you're not contributing any money to retirement, even $50 per month will make a substantial difference. That monthly contribution could add up to nearly $24,600 after 20 years, $56,700 after 30 years, and $119,800 after 40 years. That's still not enough to retire on, but it's a start. It may even cover a few years of retirement expenses when coupled with Social Security and a frugal lifestyle.

If you regularly save for retirement, an extra $50 per month can considerably speed up the growth of your savings. Someone who sets aside $200 per month for retirement will have about $98,400 after 20 years, $226,700 after 30 years, and $479,100 after 40 years. Bumping that contribution to $250 per month will leave you with $123,000 after 20 years, $283,400 after 30 years, and $599,000 after 40 years. Over 40 years, that extra $50 monthly contribution only costs you $24,000, but your final balance is $120,000 higher because of it. 

These examples highlight the benefits of boosting your retirement savings by even a small amount, but it's impossible to determine the exact difference it will make. It depends on what you had been saving for retirement previously, how long your savings have to grow before you need to begin drawing upon them, and your rate of return. But it's safe to say that it could add up to tens or even hundreds of thousands of dollars more by the time you're ready to retire.

Where to find an extra $50 a month

So the benefits are clear. The trouble is finding the extra $50 a month. There are several approaches you can take. One option is to reduce your spending to free up the extra cash. Review your budget and see if there are areas where you could cut back, like reducing how often you dine out or purchase expensive beverages, or by canceling unused subscriptions. Take steps to limit discretionary purchases, like clothing and new tech. You may have to make some lifestyle changes, but it could be well worth it if the extra money saved enables you to retire more comfortably.

Another option is to seek ways to increase your income. This could mean working overtime at your current job, switching fields or employers, or taking a job on the side. You could also consider renting out a spare room in your home or any vacation properties you have. 

If your employer offers a 401(k) with a match, make sure you're contributing at least enough to get this full match. This will net you even more for retirement without having to set aside extra money of your own. Just make sure you understand the company's vesting schedule if you plan to leave in the near future. That determines when your employer-matched funds are yours to keep; if you leave the company before you're fully vested, you could lose some or all of your 401(k) match.

Boosting your retirement contributions can seem impossible, but a closer look at your budget may reveal it's more doable than you realized. Even if all you can find is an extra $50 a month, it is still worth setting that extra cash aside. You might be surprised at the difference it makes over time.