July 26, 2018
Saving for retirement is job 1, 2, and 3 as far as I concerned. What you manage to save today obviously plays a big role in what you have to enjoy your tomorrows.
I am well aware that many of you believe you just don’t make enough to save more. Suze, we have no money left over after paying our bills.
That’s giving up before even trying. There is another strategy that can be a great boost to your retirement security, that I see so many households blow right past: scale back your spending. Spend $50 or $100 or $200 less this month, and that is money that can go into a Roth IRA.
Don’t tell me you can’t – That is code for “I don’t even want to try”. I have worked with thousands of families struggling with all sorts of financial challenges. So often – actually pretty much all the time – they tell me they have no money to put toward whatever financial issue we are focused on. But when we go over a line-by-line budget that lists all their spending, I can typically find hundreds of dollars a month that they can indeed save.
For someone who is 50 years old, scaling back spending so you can save $200 more a month today, can land you at age 65 with $53,000 more savings, assuming a 5 percent annualized return.
If you are ready to stand in your truth, I bet you can find more money to save by scaling back your spending. Spend a month asking yourself this question on every bill you pay, or purchase you make: “Is this a need, or a want?”. If it is a need, ask yourself the next question: “Can I reduce the cost of this need?”. When was the last time you reviewed your insurance policies? Considered scaling back your cell phone/cable packages (if you haven't already cut the cord). Every $10 or $20 a month in savings from a single expense adds up over time.
And as for wants: well, I am not going to finger wag you and say, “no wants.” But what I am going to insist on is that you always think about the retirement you want. Isn’t that a huge want? I think that if you use that as your guidepost you will find it easier and powerful to maybe scale back on some of your wants today; by spending less you are giving yourself the future you want. Maybe eating out a few less times a week or suggesting bring-your-own-lunch to workplace pals you typically go out with a few times a week. Spending less on wants today is the seed money to save more for the retirement you deserve.