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Why the Lazy Approach to Saving Is One of the Most Effective Ways to Save More

By Katie Brockman - Jan 27, 2020 at 6:32AM

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Sometimes the approach that takes the least amount of effort can produce the best results.

Let's face it: Saving for retirement can sometimes feel overwhelming. Money is the number one source of stress among Americans, according to a survey from Northwestern Mutual, and roughly half of survey participants admit feeling anxious, insecure, and/or fearful when it comes to their finances.

When you start to feel overwhelmed by retirement preparation, it's easy to push it all out of your mind and do nothing. While not doing a single thing to prepare for retirement isn't the wisest move, there is one minimalist approach that allows you to do next to nothing and still seriously boost your savings.

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The lazy approach to retirement investing

Saving for retirement should be one of your main financial priorities, but that doesn't mean you need to be thinking about it all day every day. In fact, taking a hands-on approach can sometimes be detrimental to your savings, because you're more inclined to micromanage your investments and make not-so-great decisions.

Instead, one of the best things you can do for your money is to take a step back and let go of control. Whether you have a 401(k) or IRA, it's possible to set up automatic contributions to your retirement fund.

In other words, you can set your account up so that a set amount of cash is transferred straight from your paycheck or bank account straight to your retirement fund every week, month, or whatever schedule you choose.

The reason this is so beneficial to your long-term financial plan is that it essentially allows you to put retirement saving on autopilot. You don't have to remember to transfer money to your retirement fund on a regular basis, because that's all taken care of for you.

Another huge benefit of automatic contributions is that it makes it easier to build saving into your budget. When you're automatically saving a set amount every week or month, you learn to live without that money. And when you're setting your budget, you know exactly how much is going toward your retirement fund each month -- which helps make saving a priority. Rather than waiting until the end of the month and saving whatever scraps you have left in the budget, automatic contributions essentially force you to reach your savings goals every month.

If you let your savings grow like this for years, you can save tens or even hundreds of thousands of dollars -- all without lifting a finger.

When to check in on your savings

Although taking a hands-off approach is one the easiest (and most effective) ways to save for the future, it's still important to monitor your savings to some degree.

This doesn't mean checking in on your investments every day or even every month, but you should occasionally think about how much you're saving to ensure you're still on track to reach your goals.

Every year or so, take a moment to think about your retirement goals. Think about what age you expect to retire, how much you anticipate you'll spend each year in retirement, etc. Be honest with yourself here, because your goals could change from year to year.

For example, if you've developed health issues and think you may need to retire sooner than you expected, that will affect how much you should save. Or if you've moved to a more expensive city, you may end up spending more per year in retirement than you previously thought. The more accurate your estimates are now, the better prepared you'll be for the future.

Once you have your goals in mind, run your information through a retirement calculator to see how much you should be saving now to reach those goals. From there, you can adjust your automatic contributions accordingly.

If you don't check in on your targets every so often, it's easy to fall off track without realizing it. You don't need to spend a lot of time making these adjustments, though, and once you've double-checked that your plans are still on track, you can go back to saving on autopilot.

Saving for retirement can be stressful, especially when you likely have a long list of other financial priorities you have to take care of at the same time. Fortunately, you don't have to micromanage your finances to see positive results. Sometimes, all it takes is loosening the reins and letting your money take care of itself.

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