Investing enough early in your career can be hard. There are always more immediate financial needs and your golden years may be decades away. Indeed, 49 percent of Americans don't currently contribute to any retirement plan, according to a new survey by LIMRA®, a worldwide research, consulting and professional development organization.
But don't let the feeling that you've fallen behind keep you from saving. "No matter how you start, whether you're saving money in an IRA, 401(k) or just a simple savings account -- as long as you just do something, you're making a difference," says Denise Winston, founder of financial education company Money Start Here.
And you can make more of a difference with moves to step up your retirement saving:
Find more funds. Examine your expenses and look for big and small ways to cut back. Once you've eliminated an item from your budget, arrange to have the amount deposited automatically in a retirement savings account. "You really fast track the saving if you take advantage of both big wins and small ones," Winston says.
Get your employer match. Many companies match a portion of the money you contribute to your 401(k) plan. Be sure to save at least enough to trigger the full match. The money is withdrawn from your paycheck automatically -- before taxes -- so you can save without even noticing you don't have the money to spend. "Contributing enough to get the full match is like volunteering for a raise," Winston says. "You absolutely have to take advantage of it."
Turn health expenses into retirement savings. Flexible spending accounts allow you to save pre-tax dollars for your medical expenditures. You generally pay for qualified expenses out of pocket, and then submit receipts for reimbursement. When you receive a reimbursement check, deposit the funds directly into a retirement savings account. "You're saving on taxes and putting that money back to work for you," Winston says. If you don't use all your FSA funds by the end of the year, you'll lose what's left -- so check which expenses are eligible and make a conservative estimate of your annual out-of-pocket medical spending.
Stash your windfalls. Pretend that raise, inheritance, bonus or tax refund never happened and route the windfall straight to retirement. "If you're already living comfortably, you won't even notice," Winston says. If you really need a treat, earmark 10 percent of the total for something fun and put the rest aside for your future. When the time comes, you'll be glad you did.
One more tip: Consider saving more in an IRA. Nearly half of all consumers in the LIMRA survey said they had no plans to contribute to an IRA because they could not afford to do so. But Matthew Drinkwater, associate managing director, LIMRA Retirement Research, notes: "In the long run, these individuals would benefit if they made even modest contributions to a pre-tax savings plan that could accumulate until retirement."
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So you’ve signed up for your company’s 401(k) plan or opened an IRA for your retirement savings. Congrats! That’s a great first step. But if you haven’t made your investment choices yet, you may still be behind the curve.