It's an unfortunate fact that a lot of Americans are drastically behind on their retirement savings. Close to half of baby boomers have absolutely nothing saved for retirement, a report from the Insured Retirement Institute found, and among those who do have something saved, 28% have less than $100,000.
Most retirees, however, will likely need several hundred thousand dollars in savings to live comfortably in retirement. The average retiree only receives around $18,000 per year in Social Security benefits, and if you have no other source of income in retirement, you'll need a hefty nest egg to survive financially.
The good news is that it's easier than you may think to give your savings a boost. With a simple shift in your thinking, you can potentially save thousands more for retirement.
Retirement saving: It's all in your head
Saving money takes a lot of willpower, and it can be tough to save when you have so many other financial responsibilities tugging your cash in different directions. For that reason, it's easy to prioritize your other expenses, figuring you'll just save whatever you have left at the end of the month.
However, that way of thinking can be dangerous. When saving is shoved to the bottom of your priority list, you risk falling behind. Then before you know it, you're just a few years from retirement and are nowhere near reaching your financial goals. And at that point, there's not much you can do to dramatically increase your savings in such a short period of time.
To avoid that scenario, one easy thing you can do is to simply think of retirement saving as one of your main financial priorities. It's tempting to push saving to the backburner because, unlike your other bills, there are no short-term consequences if you decide to skip a few months (or a few years).
Being consistent is crucial if you want to build a healthy retirement fund, though, so think of saving like it's just another bill you have to pay. If you couldn't afford to pay the rent one month, you'd find a way to scrounge up some extra cash. Think of retirement saving the same way. Set a monthly goal for yourself, and do whatever you can to reach that goal.
Although you won't get kicked out of your house or have the electricity turned off if you don't save that much each month, remind yourself of the long-term consequences of not saving. If you're not willing or able to make some financial sacrifices now to save more, you'll likely end up having to make serious cutbacks in retirement when you're forced to live on less.
The next step: Setting your savings on autopilot
You can also make saving easier for yourself by turning on automatic retirement fund contributions. With automatic contributions, you can set aside a certain amount of cash every paycheck, every month, or even every day to go toward your retirement savings. That way, you never need to remember to transfer cash to your retirement account.
In addition, automatic contributions can force you to save regularly even when you don't feel like it. When you know that a set amount of money will be going toward your savings every month, you can avoid the temptation to spend that cash.
Saving a set amount every single month can also help with budgeting. Rather than waiting until the end of the month to see how much you have left over, you know right from the beginning how much you're saving each month and how much you have left to spend on the non-essentials. As an added bonus, when you have a good idea of where all your money is going each month, it's easier to make all-around smarter financial decisions.
Even if you don't have much to save each month, getting into the habit of saving regularly is still beneficial. You can gradually increase your savings over time, but squirreling away at least a little every single month can help keep saving at the top of your priority list. If you wait until you earn that bonus, raise, or new higher-paying job to start saving, there's a chance you'll run out of time to reach your saving goals.
Sometimes small changes can make a huge difference, and a simple shift in the way you think about how you save can potentially result in saving thousands more per year. When you stop thinking of saving as something you do if you have leftover cash and instead start prioritizing it as something that absolutely needs to be done each month, you can build a healthier nest egg and create long-term financial stability.