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5 Tips to Help You Save for Retirement

Now is the right time to start putting money aside

cutting credit card, scissors, Financial Freedom: Five Tips for Retirement Savings


Pay off your smallest credit card balance first. It will motivate you to go after the other cards.

We all can come up with plenty of reasonable excuses for not saving for retirement. The big one is thinking we don’t have enough money to put aside.

But if it’s hard now to make ends meet and save, think of how hard it will be to live on just Social Security, which may replace only about 40% of your income when you retire. You’re going to need more than that — some experts say at least 80% is required — so it’s a good time to come up with ways to sock money away. Here are five tips to get you started.

Get a handle on credit card debt

Are you carrying debt on credit cards? Call the companies and see if they’ll work with you to lower the interest rate you’re paying. That way, more of the payment you make will go toward what you actually spent and not on paying interest.

If you have debt on several cards, consider targeting the one with the smallest balance first. You’ll feel great when it’s paid off, and it may give you the boost you need to go after the other cards.

AARP has a Credit Card Payoff Calculator that helps you figure out what it will take to pay off your credit card debt.

Cut your spending

If you’re spending more each month than you're taking in, you can turn it around. Find ways to cut costs. For example, pack your lunch instead of buying. Avoid purchasing things you want but don’t need (especially if it means putting those purchases on a credit card). Cut utility costs by turning off lights when leaving a room, raising or lowering your thermostat, and weatherproofing doors and windows. If you stop for coffee or tea several times a week, try making it at home. These simple changes can save hundreds or even thousands of dollars.

Find more cost-cutting tips here.

Establish an emergency fund

When something unexpected happens – a sudden illness or job loss – it’s important to have money on hand to help you get through it. Work on building up savings that will cover six months of expenses to help deal with the unexpected. Remember all those credit card payments you no longer have? Start putting that money towards your retirement by opening an account with a local bank or credit union.

Sign up for a company retirement savings account

Does your employer offer a 401(k) retirement savings plan? It may be called something else, like a 403(b) or Thrift Savings Plan. It’s the best way to save for retirement. You sign up and agree to save a percentage of your income. Some employers will match your contributions up to a point. Automatically contribute the funds directly out of your paycheck and you won’t even miss it. And if you get a raise, give your savings a raise, too.

If your company doesn’t offer a retirement savings plan, look into opening an IRA at your local bank or credit union. AARP’s tip sheet on Saving for Retirement Through IRA’s can help. It’s similar to a 401(k) plan, but without any employer match. You’ll need an upfront deposit (credit unions usually have a lower threshold), and then set up automatic contributions. Once you have your emergency fund set up, you can start funding your IRA. You’ll need to pick your investments; AARP’s tip sheet on Investing for the Long Haul can help.

Saving for retirement is more satisfying when you have a savings goal. Visit AARP’s easy-to-use Retirement Calculator to establish your personal goal.

Help family out, without risking your retirement security

These days, a lot of adult kids are moving back home with their parents after finding they can’t yet make ends meet on their own.

If this happens in your family — and you have the funds to welcome your child back — that’s great. But make sure your child contributes financially. A part-time job while looking for a full-time job can help your son or daughter make contributions to your extra grocery costs and higher utility bills.

Also of Interest

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