5 tips for boosting savings
If you are woefully behind on saving for retirement, then try to delay gratification on purchases, save your raises and pay off credit cards, financial experts say.
A national survey released Tuesday shows that about 36% of workers have less than $1,000 in savings and investments that could be used for retirement, not counting their primary residence or defined-benefit plans such as traditional pensions.
Many retirees are also short on funds, with 29% having less than $1,000 in savings and investments, according to a telephone survey of 1,000 workers and 501 retirees from the non-profit Employee Benefit Research Institute and Greenwald and Associates.
USA TODAY asked experts for their five top tips to boost savings:
Delay gratification. Don’t buy everything you see, says Gary Schatsky, a New York City financial planner and president of ObjectiveAdvice.com. People have to take stock of their needs vs. wants. “Needs must be met. Wants can be delayed. One of the things you need is a good retirement plan, some savings for emergencies and a plan for the future.” You have to make a list of what you need and want, he says. “You can enjoy lattes, dinners out and vacations as long as you are saving. You have to decide what’s important to you and start saying no to the things that are not.”
Save 10% to 15% of your annual income. “While that may seem like a daunting amount, if you set it up early, you can learn to live on the amount that’s left,” says Fidelity Investments EVP John Sweeney. “We recommend putting 10% to 15% right into retirement accounts, because a lot of our retirement savings is going to be up to us.”
By investing in a 401(k) or 403( b), or an Individual Retirement Account (IRA), you can reduce your taxable income, he says. “You are saving money because you are paying taxes on the lower income level.”
Take advantage of matching contributions. If your employer offers matching contributions in your savings plan, take it, Sweeney says.
Save your raise. “If you get a raise, bank it,” Sweeney says. Consider investing all or a portion of your raises each year, he says. You can do the same with bonuses or tax refunds.
uPay off high-interest-rate credit card debt. If you are paying 18% interest on credit card debt, “that’s eating a hole in your pocket,” Sweeney says. It’s important to pay it off, if you can, or the second choice is to think about ways to reduce the interest payment, such as getting a home-equity loan at a lower rate.
Another option is to continue working during your retirement years, says Nick Ventura, CEO of Ventura Wealth Management in Ewing, N.J. “Many part-time jobs exist in retail, health care and other businesses. Helping people and bringing life experience to these jobs can be very rewarding.”