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9 Simple Ways to Worry Less About Retirement

Joe Udo

Last week, the Employee Benefit Research Institute released their 2013 Retirement Confidence Survey, and the results aren't unexpected. About half of the people surveyed have no or little confidence that they will have enough money to retire comfortably.

Workers know they have to save more, but they aren't able to do it. Some 20 percent say they need to save between 20 and 25 percent of their income, and 23 percent say they should save more than 30 percent of pay.

What if you are in your 40s and have no retirement savings? It would have been better if you started saving for retirement earlier, but it is not too late. Here are nine simple things you can do now to prepare for retirement:

1. Cut spending. If you are in the half of the population that worries about retirement, you can do something about it now by reducing your spending. The first step toward retirement saving is to examine your monthly expenses and see what you can cut. You'll have to ask yourself if you'd rather spend $1,092 a year on coffee or prepare for retirement. Once you reduce your spending, the rest of the steps will be much easier to do.

2. Increase your income. Cutting spending is an essential first step, but you also need to increase your income so you can save more. The economy is starting to get better, so hopefully there will be some opportunities in your field. Some ways to increase your income are higher education, training, switching jobs, or just finding an extra job.

3. Pay off your consumer debts. Credit card and other high-interest debt can take a huge bite out of your income. Many households carry credit card balances and pay a lot of interest to the bank every month. Wouldn't it be better to channel that money to your future self instead?

4. Increase your 401(k) contributions. The maximum contribution limit for 401(k)s and other similar plans increased to $17,500 in 2013. If you are worried about not having enough in retirement, then increase your 401(k) contribution and aim to max it out in a few years. You will have more retirement savings and you won't even miss the money since it will be automatically deducted from your paychecks. For those who are 50 and older, the catch-up contribution limit is an additional $5,500.

5. Increase your Roth IRA contributions. Another great way to save for retirement is the Roth IRA. For 2013, you can invest up to $5,500 in an IRA. You won't have to pay any tax on the gains in this account once the qualifications are met. The catch-up contribution limit is an additional $1,000 for those who are 50 and older.

6. Invest outside of your retirement accounts. Maxing out your 401(k) and Roth IRA contributions are great, but they might not be enough if you started saving late. Adding peer-to-peer lending, rental properties, and an after-tax brokerage account to your portfolio will help ensure a comfortable retirement.

7. Pay off your mortgage before retirement. The housing bill is the biggest monthly expense for many households. If you pay off your mortgage before retirement, it will be much easier to make ends meet. You can use one of the mortgage payoff calculators on the internet to time your mortgage payoff to your retirement date.

8. Stay healthy. Another big expense in retirement is health care. While a large part of our health is genetic, we can still work to stay healthier by keeping our weight reasonable and avoiding bad habits. Eating right and exercising regularly will go a long way toward keeping your weight down.

9. Be selfish. Many of us want to help our kids, but you should put your retirement first. If you can't save for retirement and your kids' college education at the same time, then you need to put your retirement saving first. Your kids will have options like getting student loans, attending a more affordable community college for the first two years or working.

These nine things are simple, but they are not easy to do. However, if you don't want to work in your 70s or solely depend on Social Security, then you need to bite the bullet and get these things done. Worrying about retirement isn't enough. You also need to do something to improve your situation.

Joe Udo blogs at Retire By 40 where he writes about passive income, frugal living, retirement investing, and the challenges of early retirement. He recently left his corporate job to be a stay at home dad and blogger and is having the time of his life.

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