If You Ever Want to Retire, Take These 7 Steps Before Your Next Paycheck
Pondering retirement is daunting. According to that online calculator you plugged some numbers into, you’ll be working until your 90th birthday.
It’s not just you who feels overwhelmed. Only 46% of Americans believe their current retirement savings plan is on track, according to a Penny Hoarder analysis of Federal Reserve survey data. That means more than half of us aren’t feeling too confident about being able to retire at 65.
7 Simple Tasks to Get Your Retirement Savings on Track
Before you give up and start buying lottery tickets or plotting a jewel heist, take a few minutes to walk through these simple tasks. No, they won’t help you retire next year, but they can help you get on track to retiring comfortably. (Yes, it is possible.)
1. Give Your 401(k) a Boost
Got a 401(k)? You’re already on the right track, so stop being so hard on yourself.
Now, you just need to make sure it’s doing what you need it to. However, tapping into that account and deciphering the information — or lack thereof — can be hard.
There’s a robo-adviser for that. Blooom, an SEC-registered investment advisory firm, will optimize and monitor your 401(k) for you.
It gives you an initial 401(k) checkup for free, and you’ll get to know your account a little more intimately. Find out if you’re paying too many hidden fees, have the appropriate amount invested in stocks versus bonds, that kind of fun stuff.
After that, the tool is $10 a month to use to continue to monitor your retirement account. Let Blooom know your target retirement age, and it can help you get there by investing more or less aggressively.
2. Invest 15 Cents Into the Stock Market
Yeah, we know what you’re thinking: 15 cents? How’s that going to do me any good?
Well, that leftover change from your morning coffee and evening grocery hauls could turn into more than $1,000.
That’s what happened when Penny Hoarder reader Jeremy Kolodziej opened an investment account with Acorns. The app’s round-up feature bumps each of your purchases up to the nearest dollar and puts the spare change into the stock market, which helped him mindlessly save $1,076 in about 20 months.
“It’s a virtual coin jar,” he says. “You don’t even think about it.” He used the spare change to pay for two vacations.
Plus, Acorns invested the money for him, allowing him to grow his savings — without studying stock prices or managing trades.
The app is $1 a month for balances under $1 million, and you’ll get a $5 bonus when you sign up.
3. Set Aside a Chunk of Your Paycheck
A 401(k) or other type of retirement account is essential for a healthy retirement. However, you’ll want to establish a savings account, too. No, it won’t grow your money as quickly as that retirement account, but it’s less risky — and you can access your money at any time in case of an emergency.
Unfortunately, many of us have trouble tucking money away into a savings account.
That’s why we recommend opening a second account exclusively for saving and automatically deposit a chunk of your paycheck into it. An iOS app called Varo Money combines traditional banking tools with modern technology to help its customers become financially healthy.
Here’s the best part: Pair your Bank Account with a Varo Savings Account where you’ll earn 2.10% annual percentage yield. That’s 35 times — repeat, 35 times — the average savings account, based on a 0.06% average reported by CNN Money.
4. Cut Your Expenses, Because Every Dollar Counts
Planning for retirement isn’t all about investing and saving. It’s also about cutting expenses. Start by evaluating your monthly bills — those inescapable expenses.
Download TrueBill, an app that’ll negotiate your bills, cancel unwanted subscriptions and refund your bank fees.
After downloading the app, create an account and link your bank account and/or credit cards. On average, Truebill customers get $12 in credits off their cable bills each month.
The app will also remind you of all those sneaky subscriptions you’ve signed up for through the years, so you can cancel what you don’t use and reclaim your monthly budget.
Signing up and using the service is free, though there are some paid premium services that are totally optional — but could totally be worth it.
For more ways to cut down on bills, check out these suggestions.
5. Rein in Your Debt
Do you have debt that just refuses to die? Yeah, that could turn into an obstacle to a comfortable retirement, so it’s better to take care of it sooner than later. Plus, once it’s off your plate, you’ll probably feel more confident about you retirement plans.
First, figure out exactly what you’re dealing with. Pull a free “credit report card” from Credit Sesame. It’ll break down your debt by category and account, and it offers personalized tips to help you manage it better.
Using those tips, your second step will be to hash out a debt-payoff plan. It doesn’t have to be anything complicated. In fact, you can map out an idea of how you want to pay off your debt in 13 minutes.
Or, if you need some motivation, turn it into a challenge. Give yourself five months to conquer debt.
6. Update Your Budget
Whether you’re taking steps to increase your savings, amp up your investments, decrease your monthly bills or pay down debt, adjust your budget accordingly.
If you haven’t yet found a budgeting tool you love, try Empower.
Empower helps you organize and track your financial goals. Simply link your accounts, and every time you log in, you’ll see a simple snapshot of where you stand on your monthly budget. Are you above or below the line? In one second you’ll know whether you’re on track or need to dial things back a bit.
7. Peep at Your Peers’ Retirement Plans
Picture this: You’re sitting across from your longtime friend at the local diner. You catch up on life, then, because you’re curious, you ask your friend about her retirement investments, her student loan debt and her savings.
How many of you just cringed?
Most of us don’t have friends — or even family members — who are willing to talk explicitly about these numbers.
Status Money is an app that allows you to anonymously compare your financial situation with your peers without asking those awkward, prying questions. Link an account to tap into this database and you’ll be able to compare your income, debt, interest rates, credit score, spending… you name it.
By seeing how others are doing, you can see what you need to work on — or where you can sit back a little and just breathe easy.
Getting on Track to a Financially Healthy and Happy Retirement
Are you feeling less like you need to hatch some “Ocean’s 11”–type scheme? (Seriously, don’t do that.)
Planning for retirement doesn’t require such drastic measures. Just taking small steps — even reading this article — can help you get on track. The sooner you start, the better, so knock these tasks out before your next payday.
*Disclosure: We have a financial relationship with Swell Investing LLC and will be compensated if consumers apply for an account and/or fund an account with Swell through links in our content. However, the analysis and opinions expressed here are our own.
Carson Kohler ([email protected]) is a staff writer at The Penny Hoarder. Although she’s not yet 30, she’d be happy retiring, like, tomorrow. That’s why she uses several of these tools to stay on track to a stress-free 67.