Saving for retirement amid high prices, vacations, and other financial plans isn’t easy.

By 2022, about 41% of American adults have stopped contributing to a retirement fund due to the rising cost of living, according to a study. 2023 American News Survey. Even more worrying, almost a third withdrew their retirement savings in 2022 to stay afloat. If you feel overwhelmed or burdened by others financial debt or goals, you are not alone.

As a financial coach, I know what it means to pay off debt while still pursuing my investing goals. Today, I have enough to retire early, but it hasn’t been easy. The landscape has changed significantly since I made my first 401(k) contribution nearly 17 years ago — and the retirement savings gap is even wider.

If the optional job seems decades away, you may feel like you have enough time. Waiting to take steps toward retirement is a time you won’t come back from. Saving for retirement East difficult, but with a proactive financial plan, ongoing education and proper emotional support, you can take small steps today to help you build a respectable future during your golden years. If you feel overwhelmed or burdened by others financial debt or goals, you are not alone.

Learn more: The $1 Rule Helped Me Ditch Debt and Retire Early – and It Can Help You Too

Take steps to prepare now, even if you’re not ready to save

Saving enough to enjoy your retirement years is certainly a challenge, especially as housing and other essential costs continue to rise while wages fail to keep pace. Many of my own students aged 50 and over have delayed their retirement plans because they simply cannot afford to live off their current savings. Others may have deferred contributing to a retirement fund until their debt is paid off or their income increases.

In coaching thousands of people to achieve their financial goals, the #1 regret I hear is that they all wish they had started sooner. There will probably never be a “perfect” moment. There are ways to get started with saving for retirement without depositing money. Here’s how I recommend you get started:

• Open accounts now so they’re available when you’re ready.
• Use features like “watchlists” to track the investments you’re interested in so you know their trends and nuances over time.
• Pay high-interest debt like credit cards to increase your cash flow. Once a debt is paid off, you can put some of that money toward retirement savings while working on the next debt.
• Follow money experts like those at CNET Financial Expert Review Board for practical education and inspiration.
• Talk to people you know who have successfully retired to remind yourself that it’s possible.

The more financial knowledge you arm yourself with, the easier it will be for you to get started.

Social Security can help but it’s rarely enough

If you’re counting on Social Security benefits to see you through retirement, I urge you to do some research. I learned first hand that Social security benefits often do not extend far enough. When my parents retired, they relied solely on these benefits to survive. After my father died, we learned that only a portion of his benefits would be used to care for my mother. Even with comprehensive benefits, Social Security alone is rarely enough to cover medical costs. My mother suffered from diabetes and kidney failure, both of which required health costs beyond what social security would cover.

To better plan, determine how much you’re expected to collect from Social Security when you retire. THE maximum monthly Social Security benefit it depends on your retirement age. For example, if you retire in 2024 at:

• at age 62, your maximum benefit would be $2,710
• full retirement age, your maximum benefit would be $3,822
• at age 70, your maximum benefit would be $4,873

The longer you wait to retire, the greater your benefit. If you have to retire early, your benefits will be lower.

Take advantage of Roth IRAs

Regardless of your age, the first place I recommend putting your retirement funds is in a Roth IRA, or if your employer offers it, the Roth option in your 401(k). About 88% of 401(k) plans offered a Roth account in 2021, nearly twice as many as 10 years ago, according to the Council of Diet Sponsors of America.

Since you contribute to a Roth IRA with after-tax dollars, when you withdraw funds from a Roth IRA When you retire, you won’t have to pay any tax on this money. More importantly (and what most people forget), you also won’t pay taxes on the growth made since your initial contributions.

If you contribute $5,000 to a traditional IRA or 401(k) and that amount grows to $25,000, you will pay taxes on the entire $25,000 when you withdraw. If you contribute to a Roth 401(k), you won’t pay taxes on the additional $20,000. This is a huge advantage.

For 2024, you can contribute $7,000 total for all your IRAs, whether traditional (pre-tax) or Roth (after tax), and the limit goes up to $8,000 if you’re 50 or older. Contributing $7,000 per year may seem like a lot at first, but if you divide that amount by 365 days per year, you’ll need to save $19.18 per day, or about $575 per month, to reach the IRS limit. The sooner you start, the longer your money will have to work for you, thanks to the power of compound interest.

For example, let’s say you start with $0 today and invest $575 per month to reach the IRA’s $7,000 maximum. If you continue at this rate for 10 years and earn a 10% interest rate, you will have $111,562 more to live on in the future.

Roth IRAs, however, have income limits. For 2024, you will no longer be able to contribute the full amount if you earn more than $146,000 if you are a single filer or $230,000 if you are married filing jointly. I recommend looking into a traditional IRA if you exceed the income limit to contribute to a Roth IRA. My biggest regret in my own financial journey was not understanding the power of the Roth IRA sooner.

Take advantage of user-friendly investing tools

Just ten years ago, investing was much less transparent and much more complicated. We no longer have to settle for the expensive and confusing mutual funds that our parents and grandparents had to choose from. Instead, we can start saving for retirement in minutes, thanks to the rapid evolution of digital tools and the accessibility of online banking and investment platforms.

I have a 401(k) through my company and recently transferred my traditional and Roth IRAs from an outdated financial services provider to Fidelity, which is more user-friendly and customizable and includes education on each investment. Even if you’re not self-employed, check your company’s investment platform to see what options are available to you. You may be able to take control of where you invest your money.

It’s even more encouraging to see more environmental, social and governance measures, aka ESGoptions available to investors. For example, you can now choose retirement investments based on social or environmental factors such as a company’s carbon emissions, waste management practices, or commitment to employee diversity.

Enjoy High Savings and CD Rates

OUR current high rate climate can help you earn a little more as you approach retirement. While a high yield savings account shouldn’t be your primary retirement account, it can serve as a useful supplement. Having at least a month’s savings buffer in a HYSA can reduce your risk of withdrawing money from your retirement fund when times get tough.

This one-month buffer should include what it would cost to cover your housing, utilities, transportation, food and health costs so you can start to stop waiting for the next paycheck to pay your bills. invoices.

If your risk appetite is not strong enough to invest in the stock market, real estate or other alternative investments, certificates of deposit help me save a little more money while reducing the temptation to spend it immediately.

For example, I decided to set aside the amount insured by the Federal Deposit Insurance Corporation in an account 1 year CD earn more than 4% for a down payment on a house this year, which will help me pay off a mortgage on a larger house.

CDs are a great entry point into investing for anyone worried about losing money. They can help you diversify your overall assets, but you won’t earn as much over time as you would by investing in the stock market.

After maximizing your contributions in tax-advantaged retirement accounts, if you’re ready to invest with a little more risk, consider investing with an online platform or robo-advisor to grow your money with index funds, exchange-traded funds. and other types of investment.

Don’t wait. Your future self will thank you

The sooner you start your retirement savings journey, the faster your money will grow. Even if you’re not yet ready to take the plunge and start saving, research different retirement accounts and review different savings strategies to make prioritizing your future a little easier.

When you’re ready, plan to make regular contributions to stay on track and grow your retirement savings. This way, you get in the habit of contributing and can adjust your budget based on your retirement savings, necessities and other financial goals.

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