It’s not always easy to start saving for retirement. As a millennial money coach, I juggled paying off $300,000 in debt while investing. While I now have enough money to retire early, the landscape has changed dramatically since I made my first 401(k) contribution nearly 17 years ago — and retirement savings gap is even wider.

About 41% of American adults in 2022 will stop contributing to their retirement fund due to increases in the cost of living, according to a study. 2023 US News survey. Even more worrying, almost a third will survive by withdrawing from their retirement savings in 2022.

If you’re feeling overwhelmed or burdened by other financial debts or goals, you’re not alone. Saving for retirement like that It’s tough, but with a proactive money plan, ongoing education, and the right emotional support, you can take small steps in your golden years that will help you build toward a respectable future.

Even if you’re not ready to record, take steps now to prepare

Saving enough to enjoy your retirement years is certainly a challenge; Wages are not keeping pace, especially as housing and other basic expenses continue to rise. Many of my students, aged 50 and over, postponed their retirement plans because they could not make ends meet with their current savings. Others may have delayed contributing to their retirement fund until their debts were paid off or their income increased.

My #1 regret in coaching thousands of people to achieve their financial goals is that they all wish they had started sooner. There will probably never be a “perfect” time. But there are ways to get ready to save more for retirement without putting any money down. Here’s where I recommend you start:

• Open your accounts now so they’re available when you’re ready.
• Use features like “watchlists” to follow investments you’re interested in and learn their trends and nuances over time.
• Down payment high-interest debts such as credit cards To increase your cash flow. Once a debt is paid off, you can direct some of that money toward retirement savings while you work on the next debt.
• Follow money experts like these CNET Financial Expert Review Board For practical training and inspiration.
• Talk to people you know who have successfully retired to remind yourself that it is possible.

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

Social Security can help but is rarely enough

If you’re relying on Social Security benefits to see you through retirement, I recommend doing some research. I learned this first hand Social Security benefits often it doesn’t extend far enough. My parents relied solely on these benefits to get by when they retired. However, when my father passed away, we learned that only a portion of his benefits would go towards caring for my mother. And even with all the benefits, Social Security alone is rarely enough to cover healthcare costs. My mother was struggling with diabetes and kidney failure; both of these were necessary medical expenses It’s beyond what Social Security will cover.

To plan better, find out how much you’ll need to collect from Social Security when you retire. Maximum monthly benefit for Social Security It depends on your retirement age. For example, if you retire in 2024 on:

• If you are 62 years old, your maximum benefit is $2,710
• full retirement age, your maximum benefit $3,822
• If you are 70 years old, your maximum benefit is $4,873

The longer you wait to retire, the greater your earnings. But if you need to retire earlier

Take advantage of Roth IRAs

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

Because you contribute after-tax dollars to a Roth IRA, when you withdraw funds from a Roth IRA Roth IRA In retirement, you won’t owe taxes on any of the money. But more importantly (and what most people overlook), you also don’t pay taxes on the growth you’ve achieved since your original contributions.

If you contribute $5,000 to a traditional IRA or 401(k) and it grows to $25,000, you’ll pay taxes on the entire $25,000 when you withdraw the money. But if you contribute to a Roth 401(k), you won’t pay taxes on the additional $20,000. This is a huge benefit.

for 2024, You can contribute $7,000 Total amount across all your IRAs, whether traditional (pre-tax) or Roth (post-tax), and the limit goes up to $8,000 if you’re age 50 or older. Contributing $7,000 a year may seem like a lot at first, but if you divide it by 365 days a year, you’d need to save $19.18 a day, or about $575 a month, to reach the IRS limit. The sooner you start, the more time it will take for your money to work for you, thanks to the power of power. compound interest.

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

Roth IRAs have income limits. For 2024, you’ll phase out paying the full amount if you earn more than $146,000 if you’re filing a single tax return or $230,000 if you’re married filing jointly. If you exceed the income limit to contribute to a Roth IRA, I recommend turning to a traditional IRA. My biggest regret in my own financial journey was not understanding the power of the Roth IRA sooner.

Take advantage of user-friendly investment tools

Investing was much less transparent and much more complicated even a decade ago. We no longer have to settle for the expensive and confusing investment funds our parents and grandparents had to choose from. Instead, thanks to rapidly evolving digital tools and accessibility, we can start saving for retirement in minutes. online banking and investment platforms.

I have a 401(k) through my company and recently rolled over my traditional and Roth IRAs from a former financial services provider to Fidelity, which is more user-friendly and customizable and comes with education on each investment. But even if you’re not self-employed, check out your company’s investment platform to see what options are available. You can take control of where you invest your money.

It was even more encouraging to see more environmental, social and governance metrics, aka ESGThere are options for 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.

Take advantage of high savings and CD rates

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

This one-month buffer should include the cost of covering your housing, utilities, transportation, food, and healthcare so you can avoid waiting for your next paycheck to pay your bills.

I like to use it if your risk appetite is not strong enough to invest in the stock market, real estate, or other alternative investments. certificates of deposit Now to help me save a little more money and also reduce the temptation to spend immediately.

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

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

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

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 ready to take the plunge and start saving just yet, research different retirement accounts and brush up on 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 boost your retirement savings. This way, you’ll get into the habit of contributing and can adjust your budget to fit your retirement savings, needs, and other financial goals.

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