The Best Ways to Save for Retirement

Published on July 24, 2014 By Lauren
  • Join my community and get a
    FREE Complete Budget Pack
    sent right to your inbox!

    Lauren Greutman Recovering Spender

    Grab a copy of my
    #1 BEST SELLING BOOK!

    BUY NOW

    Retirement is something we should all be thinking about. Time is ticking away.

    While saving for retirement isn’t necessarily top priority if you’re paying off debt or building your emergency fund, it’s still worth thinking about so you can make the most money possible when that time comes.

    And trust me, there’s a lot to think about.

    We asked the Financial Blogger’s Conference community what they thought were the best ways to save for retirement and we received a few responses we’d like to share with you today.

    Take a look at what they had to say below – I promise it’ll be worth your while. Plus, be on the look out for additional tips in these quotes – there are a ton of them.

    1. Save a percentage for retirement.

    Some financial experts, like Dave Ramsey, recommend investing 15% of your income into retirement. The nice thing about a percentage is that it’s easy to calculate and gets people started investing. However, you may want to adjust your percentage based on other assumptions like how long you’ll be investing, what you expect your average rate of return to be, and how much you’ll need to spend during retirement.

    Here’s what Kate Dore at CashvilleSkyline.com says about how she saves for retirement:

    I am a single, 31-year-old who is employed full-time with a growing side business.

    I haven’t had access to a 401(k) for the majority of my career, so I’ve opted to save for retirement through a Vanguard Roth IRA and brokerage account. My investments are a mix of stock index funds and individual stocks. You can see a full breakdown of my net worth here.

    I’m currently saving between 40-50% of my take home pay each month and plan to invest in my property later this year. My current plan? Live frugally, save as much as possible, and generate multiple streams of revenue to support myself in retirement.

    As you can see, Kate is saving a pretty large percentage of her take home pay each month for the future. Because she’s in her early 30s, and if she keeps up the good work, she’ll most likely have a very healthy retirement by the time she hits her 60’s… but probably much earlier than that.

    Kate also stresses the importance of keeping living expenses down while generating multiple income streams. Way to go Kate!

    2. Automate your savings.

    Sometimes the most difficult thing about saving for retirement is actually setting money aside on a regular basis. Some people do this manually and forget. A retirement plan is no good if it’s not being used!

    That’s why automating your savings can help you stay on track and actually invest for the future. You won’t have to remember and it will just happen for you without you lifting a finger.

    Here’s what Teresa Mears at LivingOnTheCheap.com says about automation:

    Automate your savings so the money leaves your account before you even know you have it. I did this easily when I had a regular job, but it was harder to make myself do it as a self-employed person. It’s the only way to make it work.

    Teresa brings up some good points here. If you’re self-employed, make sure you automate your savings with a site like Betterment.com. Many financial advisors also have ways to automatically draft your account.

    Also, keep in mind that if you automatically draft the funds from your checking account, you won’t have the temptation to spend the funds. Smart.

    3. Live on half your paychecks.

    For those of you who make a great living, it may be feasible to live on half of your paychecks. Kate Dore is just about doing it, and so did Doug Nordman.

    Here’s what Doug Nordman at The-Military-Guide.com said about his plan:

    I’ve been retired for 13 years. We tracked our expenses, cut out the wasteful spending, and saved/invested as much as we could in autopilot. We lived on half of our paychecks and reached financial independence in 18 years.

    Today we have: 

    • my U.S. military pension (which covers about half of our spending) plus 
    • some rental property income, and 
    • the dividends/capital gains from a portfolio invested in >90% equities.

    As you can see, Doug focused on keeping expenses down and investing as much as he could – on autopilot. See a recurring theme here?

    If you can, live on as little as possible, and invest the rest!

    4. Stay away from as much debt as possible.

    Debt can kill the opportunity for you to invest in retirement. Take a look at what Dan Zajac, CFP® at FinanceAndFlipFlops.com said about his strategy:

    My wife and I save approximately 25% of our net income. Some of this in a 401(k) and some in a non-qualified account. I like the flexibility and tax diversification of the non-qualified account.

    Additionally, we have little to no debt outside our home mortgage. My goal is to have the biggest head start possible, so I have options in my 40s, 50s, and 60s.

    Notice how he said he has little to no debt outside his home mortgage. The less debt you have, the more money you’ll have to save for retirement.

    5. Keep the fees down.

    Barbara Friedberg at BarbaraFriedbergPersonalFinance.com says to keeps fees down using index funds:

    Started saving for retirement in my 20s in an IRA. Since then used 401(k), 403(b), and Roth IRA. Invest in diversified low-cost index funds in line with your risk comfort level. Don’t stop. Don’t look at the value of the investments much and stay the course! Preferred investments include VT, VTI, REIT index, small cap value index, several international index funds.

    These types of funds try to match stock market performance – not beat it – for a very low cost. Great idea!

    If you have any other piece of advice to add, please leave a comment below. Together, let’s discover the best ways to save for retirement!

    COMMENTS

    Leave a Reply

    Your email address will not be published. Required fields are marked *