Americans aren’t saving enough for retirement, multiple surveys show, and retiring will cost more in the coming decades as people are living longer. It might be wise to look at your budget now and find extra money to stash in your retirement savings account.
Here are five suggestions to help you spot and save some extra cash.
1. Track and Compare Your Expenses
Many financial advisers suggest mapping out your monthly expenses to show exactly where your money is going.
“A solid first step is drafting a Family Financial Calendar. This helps you understand your necessary bills each month, identify which paychecks pay which bills and what resources you have available for the rest of your household expenses,” says Jeff Cortright, president of Phase 2 Investment Advisers.
“Next, put together the figures for what you have spent on variable expenses, like groceries and gas for vehicles. When you have allocated your resources, if there is still some money left, that is what you could use to contribute to your 401(k) plan.”
2. Save the Money You Gain From Raises and Paid-Off Debts
When you receive a raise, dedicate all or a percentage of that money to your 401(k). “You are already used to your current income so you won’t miss the additional funds,” says Wayne Bland, CEO of Bland Retirement Services. “Many companies also allow you to do the same with all or a portion of your bonus if you are fortunate enough to get one.”
Also, as you eliminate a debt, put a portion of the money you spent each month on payments toward that debt payment into your retirement savings, Cortright suggests.
3. Seek Out Savings on Insurance Policies
It might be possible to find extra money by switching up your insurance policies.
“Reevaluate your life insurance policy,” says Jill Beirne Davi, personal finance coach. “If you’ve changed your lifestyle in any way (lost weight, stopped smoking, etc) you may qualify for a lower life insurance rate.”
4. Cut Your Food Costs
You can rein in food costs in a variety of ways, says Danny Kofke, author of “A Simple Book of Financial Wisdom: Teach Yourself (and Your Kids) How to Live Wealthy with Little Money.” He suggests cooking at home, making a list and sticking to it at the grocery store, taking your lunch to work, and bringing drinks and coffee from home instead of buying them from vending machines or restaurants.
5. Scale Back Monthly Luxuries
Ditch the costly monthly expenditures on things you don’t really need in exchange for a higher 401(k) contribution. Find a cheaper cell phone plan, cancel that unused gym membership, lose the pricey cable/satellite packages and stop paying extra for quick delivery of online purchases, Kofke suggests.
ATM fees, overdraft fees and splurging when you eat out are costs that add up quickly, he says, so tracking your expenditures is all the more important.