If saving for retirement were easy, perhaps more people would do it. Unfortunately, many people are already well into their careers without so much as a dollar socked away for their senior years.
Recent Ascent research found that 28% of non-retired Americans don't have retirement savings. And that's not a great place to be.
If you don't make an effort to save for retirement, you may need to live on Social Security alone. But those benefits -- assuming broad cuts don't happen -- will only replace about 40% of your wages if you're an average earner.
Most seniors can't live comfortably on a 60% pay cut. If you've been struggling to fund your IRA or 401(k) plan, here are some tips to employ.
Image source: Getty Images.
1. Pick up a side hustle
Your current paycheck may get consumed by important bills, month after month. If that's the case, the gig economy could be your ticket to being able to make IRA or 401(k) contributions.
Fitting a side hustle into your schedule is easier said than done. But one thing you may want to do is explore flexible gigs you can do at your own pace -- like driving for a ride-hailing service or delivering groceries. That way, you're not automatically committing to a preset schedule every week.
2. Invest found money
You may come into extra money during the year for different reasons. Your grandmother might write you a $200 check for your birthday, or you might get a rebate from your insurance company. Or you might get lucky and find a $20 bill on the sidewalk one day.
You might think that saving your found money for retirement won't do a whole lot of good. But you'd be wrong.
Every dollar you put into an IRA or 401(k) is a dollar you can then invest in the hopes of growing it into a larger sum over time. It may be tempting to take the $20 you found on the floor and splurge on takeout, but a better bet would be to send it into your retirement account.
3. Snag your full 401(k) match
This year, 401(k)s max out at $23,000 for savers under 50 and $30,500 for those 50 and over. Contributing the max may not be doable for you by any stretch of the imagination. But if you're able to contribute enough money to snag your full employer match in your 401(k), that alone could really help you play catch-up.
Let's say your employer offers a dollar-for-dollar match on your first $2,500 of 401(k) contributions. If you can find a way to put $2,500 into your account, you'll get another $2,500 coming your way. You can then invest the $2,500 that your employer gives you, as well as your own contribution for added growth.
Let's say you're 30 with no savings. If, between your own contribution and your employer's, you're able to put $5,000 into your 401(k) this year, and your investments in that account generate an average yearly 8% return (which is a bit below the stock market's average), by age 65, you'll be sitting on about $74,000 -- even if you never end up contributing another dime.
You should aim to retire with well more than $74,000 -- regardless of how much you earn. The point is, however, that snagging your complete employer match could do your savings a lot of good.
If you're sitting on no retirement savings, you're not alone. But do your best to ramp up as quickly as possible to avoid a world of financial stress as a senior.
