Happily ever after lasts a long time, and you may find yourself already worrying about how you’ll afford to keep the fairy tale alive after retirement. Everyone dreams of an easier life after they’ve ended their working years. But with so many practical concerns, it’s normal to wonder if you could ever be saving enough for retirement to live without any anxiety.
Retirement savings should be an ongoing conversation in any household. Individuals and couples should both have plans to save for their senior years. If you and your partner are recently married or planning to start a family, that doesn’t mean you can’t put away money now for your future together. Here are five strategies to try if you want to start saving for retirement while you’re in your 20s.
Save with the Income You Have, Not the Income You Want
Many young professionals make the mistake of thinking they can only afford savings when they have a really good-paying job. This isn’t the case. You can work for $17 an hour and still put away a little something each month. The reality is that budgeting comes into play more for someone with a lower income, but that doesn’t bar them completely from ever having savings.
Aim to spend no more than 50 percent of your monthly income on living expenses. Leave at least 10 percent for retirement, another 20 for savings, and the remaining 20 for entertainment. As you build healthy spending and saving habits, it will become second nature to think about retirement as a routine cost. This is a great way to keep your marriage strong long-term because since you start the habit early, it will transition with you through the years and will be one less thing to navigate as life twists and turns.
Pay Down Your Biggest Debts
If you own a home or car, work hard to pay them down as quickly as possible. Settling for the minimum each month causes you to pay more in interest throughout the loan. If you have $300 a month left over each month after paying your bills, take another $150 and put it toward your mortgage or auto loan. In a year, that would be an additional $1800 paid off on top of your regular payments. When it comes to homeownership, having your house paid off as early as possible decreases stress and boosts happiness during retirement. You won’t have to worry about the biggest concern of housing because you’ll already have a fully-owned roof over your head.
Think About Investing
Whether it’s a life insurance policy or playing the stock market, look into investment opportunities. You can read a guide about how to profit from a short squeeze here. Short squeezes are a fast-paced, creative way to make money. A large group of investors bets that a stock will drop, but instead, it skyrockets, and they all profit. There are many ways to invest that aren’t all about stocks and bonds, though. Even opening a high-yield savings account and Roth IRA can boost your retirement portfolio.
Set Your Retirement Goals Now
What do you want to spend your life savings on? Retired couples’ dream of relocating to a tropical paradise can quickly become a dismal reality when they look at the cost of purchasing a luxury villa. Avoid romanticizing retirement life to the point you get overly invested in fantasy. Maybe an epic three-month tour across Europe could be just as memorable for you as living in Italy. Or perhaps an annual summer stay in a new country each year can fulfill your wanderlust on a much more affordable budget.
Aim for Multiple Income Streams
From a weekend job to online side hustle, find ways to boost your salary each year. You could open an Etsy store, sell homemade goods, walk dogs or do anything else you like. Side gigs can actually be a great way to profit from your passions. They have ample opportunities online, and there’s no pressure to earn a living from them, so it’s all for your own gain rather than survival.
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