Ways to Increase Your Retirement Contribution in 2019
A bump in your monthly contribution can have a drastic impact on your retirement nest egg.
For example, if you’re 27, earning $35,000 a year and contributing 6% (a monthly amount of $175) to a 401(k), you will have $268,166 by the age of 67 (assuming a 5% interest rate) if you remain at that rate. However, if you increase your contribution to 7% (a monthly amount of $204), you will have $312,861 by the age of 67 (again assuming a 5% interest rate). That’s over $40,000 more! The more you can increase your monthly contribution, the larger your retirement nest egg will be.
Here are a few ways to help you find the funds to contribute more to your retirement this year.
Track Your Spending in 2019
Really get to know your money this year. Utilize a free budgeting app, an excel spreadsheet or even take the old-fashioned approach of pen and paper to track how much you have and exactly how much you are spending.
What are you prioritizing over your future-self? Are you spending over $100 a week on eating out? Buying a $6 latte daily? Knowing the answers to these questions can help you redirect your money to increase your retirement contribution.
Cancel multiple subscriptions
Do you have multiple television and movie streaming services such as Hulu, Amazon Prime Video and Netflix? Are you using the Premium version of Pandora or Spotify for music streaming? These monthly fees add up. Save money in 2019 by canceling multiple streaming subscriptions to have one, or switch to free versions of streaming services if available.
Save your raise
Did you receive a raise? Always boost your retirement contribution with a raise if possible, depending on your unique financial situation. You can leave a portion to increase your paycheck while putting most of your raise to work for your future in a higher contribution.
Small daily expenses
Small daily expenses can cause mayhem to your saving goals. From buying your breakfast each morning from a fast-food chain, to purchasing coffee each morning instead of using the free coffee available in your breakroom, small daily expenses add up.
If you buy a caffeinated drink from a café every morning before work for approximately $5, that can add up to over $1,200 a year. You can take that $1,000 and increase your monthly contribution by $100.
Social money-saving alternatives
It’s difficult when your family and social circle has made going out with the intention to spend a customary activity. These times do come up and, although you shouldn’t become a hermit, frequently eating out does not have to be your normal. Additionally, paying for entertainment shouldn’t put a strain on your finances or take precedence over your saving goals.
Make this year the year to introduce money-free alternatives to your social circle like creating a hiking group, rotating game nights, free yoga in the park or other money-free options in your town or city. If you have a community events calendar, check it out. There may be free events available that you don’t even know about.
Put your future-self first
Remember, saving for retirement is a long-term journey. Put your future-self first and work on increasing your monthly retirement contribution. If you receive push back from family and friends, be honest. You are saving more money than you ever have before and providing financial security to your future-self.