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How to Save More for Retirement Regardless of Income

By Christy Bieber - Mar 22, 2020 at 7:03AM

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Even if you aren't making six figures, you still need to save.

According to the TransAmerica Center for Retirement Studies, most workers are woefully unprepared for retirement. Higher earners, however, have far more money saved than those with lower incomes. In fact, the median savings for workers with an annual household income of $100,000 or more is $222,000, compared with $3,000 for workers earning under $50,000. 

While it's obviously easier to save a lot of money when your earnings are in the six-figure range, every household needs money for retirement regardless of income. And a whole lot more than $3,000 should be saved to have a chance at a secure retirement. 

The good news is that you don't need to be on the upper end of the income scale to increase your retirement savings. There are some tips anyone and everyone can put into practice to build a nest egg to provide for them in their later years. 

Smiling man in suit with coins sitting next to piggy bank.

Image source: Getty Images.

Incorporate retirement savings into your budget

Most people pay their rent or mortgage payment every month without fail, along with a whole lot of other essential payments such as car payments and loan payments. These are treated as must-pay bills and top budget priorities, and other cuts will be made to cover them if necessary.

But retirement savings is no less important -- yet it falls by the wayside all too often. You should change that by budgeting for retirement savings as a vital expense. Create a budget allocating around 15% of income to retirement savings, then figure out what's left over to spend after you've covered this and other necessities. 

If you'd be left with too little after paying all your bills -- including your retirement investment "bill" -- you have to make cuts in other areas or increase your income. 

Take the frog-in-a-pot approach

There's an old saying that a frog in a pot doesn't realize it's being boiled if the temperature rises just a little bit each time.

You can make like the frog and slowly, painlessly up your retirement contributions. If you're contributing 0% of your income right now, set up automatic contributions for just 2% now, and then up that to 3% in three months and 4% in six months, and so on until you hit your desired retirement savings level. 

When you inch up your contribution amounts a little bit at a time, you won't see much of a difference in your lifestyle as you scale back just a little to accommodate a slightly smaller paycheck. You can easily get used to such small changes over time. But (unlike the frog) you'll end up in a way better position at the end. 

Avoid lifestyle inflation

Whether big or small, salary increases are often put to use to upgrade your lifestyle. This could mean dining out more or at better restaurants, or buying a new car to replace your old beater.

The only problem is, when spending expands to the size of your bigger paycheck, you miss out on the chance to devote newfound funds to shoring up your future financial security. Instead of letting that happen, keep your spending the same next time you get a raise or a tax cut, and up your retirement account contributions instead. 

If you do this right away, upping your automatic 401(k) or IRA contributions as soon as you have more money coming in, you won't have to change your lifestyle at all to grow your retirement savings accounts. 

Make good use of found money

If you get a bonus, a tax refund, or even a cash birthday gift, don't spend your windfall. Put it into an IRA you use to help you save for retirement. You weren't counting on the unexpected funds, so you don't need them in the moment -- and they can make a big difference in the amount you end up with as a retiree. 

You can save for a secure retirement no matter how much you make

Whether your income is on the upper end of the scale or you're among the millions of Americans earning $50,000 or less, chances are good you need to step up your efforts to save for a secure retirement. By following these tips, you should be able to boost the size of your investment accounts so you can ensure you're able to live a life without serious financial worries as a retiree. 

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