Easy Strategies to Start Investing for Retirement Now

Melanie Jewkes, Extension Associate Professor

Are you saving for retirement? Do you want to be saving for retirement? Are you looking for strategies to invest more money? Put it off no longer -- the best time to start saving for retirement is NOW. 
But I get it! LIFE gets in the way sometimes. It doesn’t help that picking a way to invest in retirement can be is complicated. But time is of the essence, and you are literally losing money, and money on that money (compound interest), the longer you put off figuring out how to save for retirement.
It is never too late to start saving for retirement. NOW is always better than tomorrow. Here are some strategies to get you on your way to investing in you beginning today.

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Pay yourself first. YOU (aka your future retirement) should be a top priority coming from your paycheck! Did you know we already pay Uncle Sam automatically from each paycheck? At least 7.65% of each paycheck goes to FICA (social security and medicare taxes). And even more comes out to state and federal taxes, based on your withholdings. There’s a reason taxes come out automatically -- the success rate of the payment actually happening is much higher! Make yourself the next automatic payment. Set it up either with your employer into an employer-sponsored retirement account OR set up the automatic, recurring deposit with a 3rd party retirement account so that it comes out of your account as soon as the paycheck lands.
 
As Warren Buffet is attributed as saying, “Don’t save what is left after spending...Spend what is left after saving.” Your ability to reach retirement savings goals is more likely to happen if you prioritize it to happen before other spending occurs.
 
Pay yourself the first hour of every day! The Latte Factor book by David Bach provides this great advice. Of the typical 8-hour working day, give yourself the very first hour earned of each day. You are worth at least ⅛ of your hours, aren’t you? Your retirement self will thank you! One hour of an 8-hour day comes out to be 12.5%. Set that amount to come out automatically of each paycheck, and work up to 15% and/or contribution limits.
 
Something is better than nothing. Can’t do 12.5%? Start small and strive to increase your retirement savings contributions by 1% every year. Make a goal to save your next raise. Here are a few other ideas to increase the amount you invest, especially if you are feeling like things are a little tight right now.
 

• Evaluate your spending for a 2-4 week period. Categorize and add up all the expenses. Also, spend some time thinking about what matters most to you. Do your current spending habits align with what matters most to you? If not, make adjustments so you can align your money to your goals and values.

 

• Pay off debt. Money spent on paying someone else (a creditor) is money you can’t spend on yourself. Make a plan to pay off debt, especially if you are paying large amounts of your income on debt payments (more than 36% of your income). Click here to create your own free debt payoff schedule! 

 

• Money saved now can cut your expenses. Wait, what? Is that true? It is! If you contribute to pre-tax accounts, it will reduce your taxable income. Which means less money is paid to taxes and/or MORE money comes back to you in tax returns. You could also adjust your withholdings to compensate for that so more income (less taxes) comes to you each month (but less tax return later). NOTE: consult with a tax accountant and/or financial advisor as needed to determine amounts that make sense for your situation.

 
Take advantage of your employer’s 401(k) match! Employers sometimes will “match” or put as much money as you do (to a certain limit) into a retirement plan. That is pretty much FREE money! If you don’t contribute, they won’t match, no free money for you.  Also, make sure you understand the specific vesting period rules so you can keep their contributions along with yours if you switch employers.
 
Write down one task from the ideas above to accomplish within the next week. Baby steps are sometimes the best way to move toward a goal. Don’t stress if you don’t feel like you have the money now for retirement. Even $5 per paycheck will help your mind focus on the steps it takes to reach your goal.
 
  -  Melanie Jewkes