Stopped Saving For Retirement? Here’s How To Get Back On Track.

When you’re working hard to make ends meet, saving for retirement can easily take a backseat to paying the bills.

But even being able to save a small amount can help you begin building that important nest egg. If you start by saving $1 the first week and increase the amount you save by $1 each week for 52 weeks, for example, you will have $1,378 saved at the end of the year.

If you’ve put off saving for retirement, here’s how to make a plan to put money aside for your future.

Start By Cutting Your Monthly Expenses

If being able to find $10 a week seems impossible, your first step should be to consider your expenses and figure out if you can cut anything unnecessary like eating out, monthly subscriptions, or entertainment. 

Consider that while your rent or mortgage payment may be fixed, your other household expenses — groceries, water, electricity — are variable, so you may be able to trim those. Shopping around for a better deal on your cell phone or car insurance can also free up some of your budget.

Another way to spend less each month? Get a handle on any high-interest debt. If you can’t pay this off, getting a lower interest rate may enable you to pay less each month. If you have a student loan, for example, there are income-driven repayment plans that may lower — or even eliminate — your monthly payment based on how much you earn.  

Similarly, if you’re struggling to pay for your household expenses, there are many government programs (find a list here) that can help you pay for essentials like your cell phone, utilities, doctors appointments, prescriptions, and groceries. You may be eligible for more than one program, too. And all of the money you save can be used to fund your retirement savings.

Get Support To Earn More

Socking away whatever you can is an important first step to getting back on track. You may also need to find a way to earn extra money to begin saving.

Consider taking on a side hustle as a pet sitter, babysitter, tutor, translator, or delivery driver to find the cash you need to start saving. The AARP Foundation Freelancing Resource Center offers a free WorkFinder tool that can help you find trusted online gig apps and opportunities for earning extra money.

A higher-paying job is another way to find more money to fuel your retirement savings. Not sure where to start? AARP Foundation offers all sorts of programs especially designed to help people over 50 find work and build skills for a better job. 

Finally, if you’ve been unable to save for retirement because you had to step away from work to care for a loved one, you may be eligible to get paid for your caregiving. 

Take Advantage Of Savings Tools

These days, there are personal finance apps that make saving for a goal like retirement more convenient by automating your savings and offering overdraft protection.

For example, the app might help you build your savings by giving you cash back or rounding up your purchases to make automatic deposits. Or they might offer you higher-yield savings accounts or IRAs that match what you deposit, which is like getting free money put into your account. Learn more about apps that help you save here.

Consider Opening Retirement Accounts

Savings accounts are great, especially for building an emergency fund you can access when an unexpected expense pops up. But retirement accounts such as a 401(k) through your employer or an IRA you open through yourself earn much higher returns, which can help you save even more. Plus you don’t pay taxes on the earnings until you withdraw money during retirement. Your local bank or credit union can point you to trusted options.

Automating your deposits can help you stay on track with your goal. When you enroll in a 401(k), the money is automatically deducted from your paycheck and deposited into the retirement account, making saving a no-brainer. Even better, some employers match what you contribute, giving you free money to further boost your future nest egg. 

If you’re unemployed, between jobs, or your employer doesn’t offer a 401(k), an IRA is your best bet. You can set up automated deposits into your IRA from your bank account so you remember to keep saving. And unlike traditional savings accounts, IRAs are tax-deductible, which may increase your refund or reduce the tax you owe on your tax return. 

In fact, people living on a low income who open a new IRA may also be eligible to claim the Saver’s Credit, a tax credit worth up to $1,000 ($2,000 if married filing jointly) that reduces taxable income, so you may owe less come tax time.

Bottom Line?

When money’s tight, it can feel overwhelming to plan for retirement. Take it one step at a time: spend a little less, earn a little more, and invest in a retirement account that gives you tax advantages and helps your savings grow.