Inside: We all know we need to do it, but it’s easy to put off (especially if you’re in a lot of debt). Here’s how to motivate yourself to save for retirement.
Saving money for everyday things is hard enough, but it seems like there’s a special basket of savings reserved for the most steel-willed among us: retirement savings. A recent survey shows that 30% of Americans actually have no retirement savings at all.
The people doing really well at saving for retirement sock money away in workplace retirement plans and max out their IRAs each year. For 2016, that’s $5,500 going to just the IRA alone.
$5,500 is a lot for someone like me to save for retirement. I could easily use that $5,500 elsewhere—for example, paying off some of my $83,000 of debt!
But here’s the thing: even if I don’t join the uber-hardcore-savers, I still need to be saving something—anything—now.
(note: this post contains some affiliate links)
Here’s what I’m doing to motivate myself to save for retirement even though I’ve got a lot of other things on my plate:
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Start A List Of Things You’d Like To Buy In Retirement
Saving for retirement seems like throwing money away, since you can’t use it now. You’re not throwing money away; you’re sending a money time-capsule to your future self.
So, what will you do with all that money?
I was inspired by Mel at BrokeGirlRich to create a list of things I might use my retirement funds for:
House In The Woods – $325,000
Those of you who’ve read my post, Finnish Folk Metal And A House In The Woods: What Financial Empowerment Means To Me, know that I’m a bit of an oddball.
One of my highest ambitions is to live in the middle of a forest. I found a sweet house on Zillow just outside of Olympia, WA. It had a fantastic view of the ocean and was located in the middle of a 10-acre plot (a bit small for my tastes, but it’ll do).
At the risk of being a creeper and posting pictures of other people’s homes online, let this one be a stand-in:
Norwegian Language-Learning Vacation – $12,040
I’ve always wanted to learn German and Norwegian, but Norway is prettier, and so why not take an extended vacation there to learn the language?
Related post: How To Learn A Language On A Budget
I found a cool company that allows you to stay in a host’s home for a month while taking intense language lessons for 20 hours/week.
THIS Guitar – $799
I don’t know much about guitars yet. I’ve only just started taking guitar lessons. But maybe by the time I’m retired, I’ll be an exceptional guitar shredder. This website says that the guitar is one of the best for metal-style guitar-playing. And it’s sooooo pretty!
It will be an epic battle between my IRA funds and my remaining dexterity.
So tell me, what will you buy with your retirement funds?
Start Small
If you can’t afford to put aside the recommended 15% of take-home pay or to max out your $5,500 IRA contributions (which I would not even reach if I saved 15% of my take-home pay…), then just start somewhere.
It’s important to start saving now because you need to get into the habit of saving. It’s easy to say you’ll save for retirement when you’ll make more, but I promise you: there’ll always be a reason to delay retirement savings. Do it now, and worry about bumping up your contributions later if you need to.
We’re saving just $50 each per month into a separate IRAs. I wish it was more, but we’re planning to bump it up as finances allow. I’m not an investment nerd, so we did it the simple way: we started a Roth IRA with Betterment, a low-fee investment company that’s a snap to work with.
You plug in some numbers up-front and it automatically parses your money out among the best stock and bond investments. It took us about 5 minutes to start, we set up automatic withdrawals, and Bob’s your uncle (he is, actually. Hi Uncle Bob!).
Start A Roth IRA
I was hesitant to invest in retirement accounts because most of them lock your money away—you can’t access it without losing a big chunk of your money if shit hits the fan. And in my life, an entire sewage treatment facility seems to have hit a jet engine.
Related: Best Roth! A Beginner’s Guide To Roth IRAs, Employer Roth Options, Conversions, And Withdrawals by Keith Dorney
But there’s another solution: the Roth IRA (cue angels singing and playing harps). With a Roth IRA, you can pull out your contributions (the money you’ve put in yourself) without any penalty. If you need the money, it’s there for you.
See How Much Your Money Can Grow Over Time
It’s important that you get some skin in the game now, even if you can’t afford much. Each dollar you put in when you’re young gives you a lot more money over time than if you waited.
Case in point: if I put one single dollar into an IRA today, as a 29-year-old, and never touched it until retirement, I’d have $11 in my account by age 65. If I put the same dollar in when I’m 55, I’ll only end up with a piddly $2.
I get $9 free just by putting aside one dollar now, rather than later. Think about how much it’ll grow if you invest even $10 a month, starting now.
Here are two simple retirement calculators you can use to see how much your money grows over time for a Roth IRA, and a regular workplace 401(k). Type in how much you want to contribute—even if it’s not a lot—to see how much money you could have for retirement!
Ask Yourself: What’ll Happen If You Don’t Save For Retirement?
A lot of people rely on children to support them if they don’t have any retirement savings. I don’t have the luxury of that backup plan, and so I need to do this myself.
One thing that gets me motivated to save for retirement like none other is to consider what’ll happen if I don’t save.
Here are some stories about what’ll happen if you don’t save:
- Could You Live On $1,233/Month
- What Retirement Without Savings Looks Like
- What Retirement Will Look Like Without Savings
Here are some stories from real people who are retired and didn’t have a dime saved for it:
- A Lesson From A 66-Year-Old Regarding Saving For Retirement
- Like Many Americans, My Mom Has No Retirement Savings
Saving for retirement isn’t rocket science. It’s more painful to get started doing it than it actually is to keep up the habit. Hopefully these tips will motivate you to start saving for retirement if you’re not already, and if you are, can you bump up your contributions even just a bit more?
How do you save for retirement, if at all? Leave a comment below!
Good for you, Lindsay. I started my retirement savings with $50 a month into a Roth in my late 20s too. I wish I’d started even earlier but starting with a monthly amount has the benefits of a) you learn to live on less than you make b) since you have small amounts at first, you have more flexibility to learn and experiment without a lot at stake.
Good points, Emily! I really had no idea where I should get started, so at least if I’m not in the best account for me now there’s still plenty of time to figure that out BEFORE I’ve got a ton of cash in it.
I realllly need to boost my motivation to contribute to retirement because I know that now is the best time to do it. I don’t think I’ll be maxing out my accounts until I pay off my debt, but I love the idea of thinking about what you’ll do or what you’ll buy during retirement and using that as motivation. I think I want to buy a big boat and go out on the water every week when I retire 🙂
Haha, that sounds awesome! 🙂 I don’t think I’ll be contributing the full amount to my retirement either while I’m in debt still. It sucks, but I’m glad I’m at least saving a little bit now to give me some peace of mind.
I think you’re very wise beyond your years. People don’t think about retirement until it’s too late. I’ll be helping one of my parent’s in retirement, but I’m also trying to set things up so I will have a retirement of my own and pursue my own dreams in life. Also, I will be setting up my own retirement so my children won’t have to be worried about my retirement. Instead they’ll worry about their own.
I don’t blame my parent and I love them very much as they made sacrifices for me when I was growing up, but I need to be part of the generation that doesn’t continue this for their own children, if that makes sense.
Good for you, Lila! It’s tough to be in a situation like that. At least you’re thinking ahead too about how you can make things easier for yourself and your future kids now.
The question “what will happen if you don’t save” is very scary to think about! What motivates me to save for retirement are very similar to what you mentioned! I want to be able to live comfortably in a nice house, be able to travel without worrying about money and enjoy my retirement peacefully! Having a list, whether it is written down on a paper, computer or in your head, is a great idea to keep you motivated! Any time you are in a rough patch, remembering this list can help you keep your eye on the prize!
Haha, I know! I don’t want to just EXIST in the world, I want to LIVE!
A house in the woods is one of my ultimate dreams as well! My uncle who is 69, is thinking about moving up to Oregon.
And oh my gosh, thanks for including that link to language vacation company!! I’d really wanna go to Colombia or Norway.
I know, right?? There’s a few other ones out there, but this is the first one that popped up in Google. 🙂 I hope you’re able to afford a forest house too – are you planning on settling down over here after doing your overseas stint?