You’ve probably heard that America is having a retirement crisis. In study after study, half of Americans expect financial problems in their golden years because they don’t have enough retirement savings.
Did you know it is getting worse? It is now More more than half of Americans thanks to the COVID-19 pandemic.
Here’s an example: Boston College has a Center for Retirement Research that creates a National Retirement Risk Index. Prior to the pandemic, it was said that 50% of US households are unlikely to be able to maintain their standard of living after they stop working. Now that the pandemic has fueled the economy, that number has risen to 55%.
So what about you What can you do?
We have four suggestions:
1. Maximize your 401 (k)
If your employer offers a 401 (k) plan, it’s a cinch to contribute. It reduces your taxable income and keeps more money in your pocket and outside of Uncle Sam’s. And your employer’s 401 (k) match is basically a raise.
At the very least, you should be contributing enough to get your employer’s full agreement. If your employer matches your contributions up to 4%, make sure you get every penny.
Your 401 (k) is not just a savings. It’s an investment. The magic of compound interest can potentially grow it large over time.
For example, if you invest $ 25 per week or $ 1,300 per year from the age of 21, you will get more than $ 25,000 per year to live on in retirement, with a typical return of 7%. If your employer suits your investment, all you have to do is give up $ 12.50 per week.
2. Clear your expensive credit card debt
Credit card debt is consuming your savings. It’s the most expensive type of debt out there, thanks to the absurdly high interest rates that credit card companies charge.
A free website called AmOne can help you get rid of your credit card debt faster and potentially save thousands of dollars in the long run. That’s cash that you can redeem for retirement.
AmOne compares you to a low-interest loan that allows you to pay off all your credit cards at once. Interest rates start at 3.99% – well below the 20% or more you are likely to pay with your credit card company.
Plus, you are debt free The much faster.
AmOne keeps your information confidential and secure, which is why after 20 years in business it probably still has an A + rating from the Better Business Bureau.
It takes two minutes to See if you qualify for up to $ 50,000.
If you don’t have access to a 401 (k) plan through your employer, you’ll need to save for retirement yourself. Consider opening an IRA, which is an individual retirement account that is not associated with an employer. It stays with you no matter where you live and work.
You contribute when it suits you and choose which mutual funds, stocks and / or bonds to invest your money in.
If that sounds intimidating, start small and simple. You don’t have to plow thousands of dollars into the stock market instantly to invest. In fact, you can get started with as little as $ 1. *
We like a microinvestment app called Hide You can choose from hundreds of stocks and funds to build your own investment portfolio. But it makes it easy by dividing them into categories based on your personal goals. Would you like to invest conservatively now? Totally understand! Would you like to dive with a moderate or aggressive risk? Do what you feel
Plus, Stash lets you invest in fractions of stocks, which means you can invest in funds that you normally can’t afford.
If you Join Now (it takes two minutes) Stash will give you $ 5 after adding $ 5 to your investment account. Subscription plans start at $ 1 per month. **
4. Try the budget for people who hate budgets
The 50/30/20 budgeting method is one of the easiest ways to keep your expenses in check. No need for 100-row tables or major lifestyle changes.
Here’s how it works: every month, take all your after-tax income and divide it in half. This is your most important budget (50%). Take the rest and break it down into personal expenses (30%) and financial goals (20%).
Let’s sum it up: that’s 50% for things like utilities, groceries, medicines, minimum debt payments, and other critical expenses. Then there’s 30% for fun: Thai takeaway, your Netflix subscription, a skeleton on your lawn for Halloween.
That leaves 20% for your financial goals, such as additional debt reduction payments (anything above the monthly minimum), retirement plans and investments.
If you can get rid of your debt, you will have to invest so much more and save for retirement.
And when retirement comes, you can be part of the 50% of people who don’t have to worry that much.
* For securities priced above $ 1,000, fractional purchases start at $ 0.05.
** You also bear the standard fees and costs included in the pricing of the ETFs on your account, as well as fees for various ancillary services charged by Stash and the custodian.
This article originally appeared on www.thepennyhoarder.com