Introduction to Beginning Retirement Savings
Everyone knows how important it is to save for retirement, and constant stories on the news about the complete disappearance of pensions, the failing funds of Social Security, and the falling stock markets re-emphasize how important it is to begin saving for retirement early. Many reports show that not only do the majority of people not have enough saved for retirement, but many are FAR SHORT to the point where they can't retire, or their retirement years will be at a far lower lifestyle than their lives were: which can be especially bitter for those of us who were blue collar and worked hard for lower class to lower middle class wages for most of our lives. The good news is that there are many different tips to follow and actions that you can take in order to help set yourself up with the money you need for excellent retirement years.
Ways to Make Side Money
Saving for retirement is difficult because every day life doesn't go away while you save. Bills still must be paid, rent or a mortgage paid, medical accidents happen, car payments made, and you still have to eat. Even skimming 10% can be difficult, even though that is the lowest recommended % for most people to save for healthy retirement savings for the "Golden Years." So one of the most obvious ways to save more money for retirement is to make more side money.
There are many ways to do that. Have you ever donated blood or plasma? You can be paid for both, and for men with too much iron in their system, donating blood helps keep them healthy by preventing iron build up. The amount paid for plasma donations varies from place to place, but in many places you can donate twice a week for up to $50 a week. If that money goes straight into an IRA, retirement savings account, or CD, then over time that can really add up enormously.
There's also freelancing. Starting your own business doesn't have to be all or nothing anymore because of the Internet. Ghostwrite, publish hubs on HubPages, freelance your skills on sites like Guru.com, Elance, oDesk, Rentacoder, Constant-Content, and others. Over time, even $50-$100 of income a month saved every month for 30 years really adds up. Learn to identify rare books and become a book hound. Save your change in a change jar that gets deposited into an "unassailable" savings account for retirement. If you're in a can redemption state, spend a few hours every Saturday collecting cans to turn in and put the deposit money into a savings account.
The point is that there are many options to making some money on the side, and by putting all side money into retirement savings or an emergency account you might be surprised how little it takes per week to build one hell of a nest egg over time.
Tips to Stay Honest Saving for Retirement
Many people intend to build up their retirement savings, but they falter along the way. Maybe putting in the full 10% to get an employer match seems like too much, but it's important to change this perspective. The following are some basic tips to help stay honest for saving for retirement.
Try a 401-k. The % you invest is not taxed, so a quarter to a third of the % you invest for retirement would have been lost to taxes anymore, meaning investing 10% of your pay into a 401-k doesn't mean your checks will be 10% less. The adjustment is not as steep as most people think.
Unexpected money is not "free money." If you get $100 as a birthday gift, or unexpected overtime, go ahead and keep half of the extra for yourself (you need to reward yourself once in a while to stay on track) but the other half goes into retirement savings. Do this right away.
Consider using automatic deductions. If the money never touches your hand first then it's much easier to save and not raid.
Practice "doing things" instead of "buying things" for free time. This will even make you happier: studies have shown people who read, socialize, or get out and about are far happier than people who buy gadgets, watch TV and movies, or do those activities. So instead of spending $50 ordering pizza, soda, and watching some DVDs, take a long walk in the park or join a slow pitch softball league instead.
Remind yourself of the end goal. The more you can visualize your ideal enjoyable retirement, the more likely you are to stick with a plan to get there.
This will be the most controversial tip, but it is one that might have to be considered based on situation. The "$1 million more" amount for what college grads earn over their lifetimes as opposed to non-grads is completely bogus. Even the government study used to claim that number lists a number several hundred thousand short of that number.
Student loans cannot be discharged in bankruptcy, and many students have found out that loan companies can keep on charging more and more fees, making it virtually impossible to pay back. Being unemployed with private student loans is a recipe for disaster. If you don't believe me, check out the article in the link section down below that even says lawyers aren't at all immune to this.
If you don't know what you want to do, you should wait before going to college. If your interests are not in solid skill degrees like math, science, or business, you should think really carefully about going to college. If you're not getting a full ride (scholarships and grants, no loans) you should think carefully about going to college. Not only are those four years you're not working and saving, but you get those student loans to pay off whereas that money could be invested right into retirement.
Interesting numbers: mess around with a retirement calculator and see what a difference adding an extra 7 years of investing in a retirement account does. This is assuming college grads start retirement fund at 25 (which is far earlier than most due) versus an 18 year old who starts right away, and even assumes the 18 year old won't get any raises and isn't investing the full amount in their IRA right away. Add in the student debt, and the fact that jobs like teaching start at low pay and don't become lucrative until years of experience, and a smart younger person who starts saving early can retire with far more money than someone who goes to college and even gets paid a lot more throughout their career.
Not to say college isn't good, or isn't a smart way to go, but it's a lot better if you know what you're doing going in and can avoid student loans to get there.
Want to Retire? Change Your Thinking!
This connects with the last section, as well. The majority of people don't have enough money to retire, the majority of people aren't happy, the majority of people aren't doing what they want to in life. That's depressing, but the studies show those numbers are true. So why do what everyone else is doing when it doesn't work???
Think small and take small steps towards your goals. Don't get hung up on $5K or $3 numbers, because many people never have that much just set aside. Put away a little at a time, look at earning some side money, and remember that if the whole stock market is shooting up, you're buying high, and if a current recession scaring you from a stock market lasts 30 years, then we're all probably screwed anyway. Look at buying when it's cheap and keep the retirement savings building.
Don't look at retirement savings as a chore, but as a goal to be energized about - as the first step towards your absolute dream retirement. Going for this image makes retirement savings somewhat enjoyable and helps you stay on track towards a fun and achievable goal versus being a constant drag.