Saving for retirement is necessary for most of us. At some point, we're going to want to walk away from our career, and, unfortunately, Social Security just won't provide enough to make ends meet and enjoy the lifestyle we want in life. Thus, retirement savings are required.
For many people, the biggest fear when it comes to saving for retirement is that it will devastate their paycheck. If you're already struggling to make ends meet, the idea of putting away 10 percent or more of your paycheck sounds almost impossible. And even if it is possible, it sounds incredibly uncomfortable.
Fortunately, there are a few strategies you can use to kick start your retirement planning without slashing your take-home pay. Here are four tactics you can try on for size.
Build a side business. Spend some of your evenings and weekends investing your time and energy into building a side business that can generate an income. This can take whatever form you like -- writing e-books, freelancing in your field, finding and selling arrowheads -- the list is truly endless.
One advantage of a side business is you can direct all the income from that side business into retirement savings. If you can come up with a side business that earns you even a few percentage points of your current salary, it can be a nice bump in your retirement savings.
Another big advantage is that a side business can continue to earn income for you after you retire. There's no reason you can't keep running your side business in retirement, but some product-based and royalty-based side businesses can even keep income rolling in if you stop actively working on them.
Retire later. Instead of holding onto the dream of retiring at age 62 or 65, start looking at 67 or 70 as your retirement age instead. The average life expectancy for Americans is age 78, and people are only expected to live longer in the future. So even if you retire at 70, you'll likely have more than a decade of retirement to enjoy.
This is the best option if you're a go-getter and like to stay active and productive. For many people in that situation, retirement can seem rather scary. What will you do with your time and energy? Staying in your career for a few more years allays that fear.
Retiring later also offers a multitude of benefits when it comes to retirement planning. It allows you to take advantage of maximum Social Security benefits by waiting to start receiving benefits. It also gives you more years until your target retirement, meaning you'll have more total years to save. Putting away a lower percentage of your paycheck can actually work if you're waiting a few extra years.
Use 401(k) matching. If your employer offers 401(k) matching, you should take advantage of every dime of it. By just giving up a few percentage points of your take-home pay, 401(k) matching can transform a small amount of money into a total contribution of 10 percent or more of your salary. It's free money by the truckload.
For example, if you were to contribute 6 percent of your income and your employer offers a full match, you would be putting far more into your 401(k) than what is taken out of your paycheck.
In other words, you can't afford to turn down this much free money. For just a few percentage points of your take-home pay, you can put your retirement savings into overdrive.
Put your money into things that will grow in value. All of us enjoy spending money on the pleasurable things in life. The smart ones among us find ways to spend their money on pleasurable things that don't lose value, or even gain value, over time.
For example, if you're passionate about a particular type of collectible that has a history of retaining value, use your spending money to buy those collectibles and hold onto them awhile. You'll get enjoyment out of owning them, and you can sell them at a later date and get your money back or more.
If you enjoy fixing things, buy an old fixer-upper house and spend your spare time and hobby money getting that house into great shape. Then sell it and put some of the proceeds toward retirement, using the rest to buy another fixer-upper. Alternately, you could rent out that house and put half the proceeds into a Roth individual retirement account for yourself.
Retirement planning does not have to destroy your paycheck. Instead, you can use your personal expertise, your free time, your energy and your smarts to start building for your eventual retirement.
Trent Hamm is the founder of the personal finance website TheSimpleDollar.com, which provides consumers with resources and tools to make informed financial decisions.
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