Expert: 5 Realistic Ways To Save for Retirement While Living Paycheck to Paycheck
As Americans live longer, retirement can now stretch 20 to 30 years — requiring a sizable nest egg. Yet many people are struggling to save, especially those living paycheck to paycheck. However, even small, consistent steps can make a real difference over time.
Here are the strategies one banking expert recommended for saving for retirement while living paycheck to paycheck.
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1. Start Small and Build Consistency
You don't need to start setting aside thousands or even hundreds of dollars for retirement — it's OK to start really small.
"Even saving $5 to $10 a week can make a difference over time," said Toni-Ann Sforza, chief operating officer at Municipal Credit Union. "Consistency is far more important than the initial amount."
2. Cut One Expense and Redirect the Money
Finding room in your budget is often the hardest part, but even small cuts can add up quickly. If you take a closer look at how you're spending your money, you can likely find a discretionary expense or two you can cut.
"Redirect one small expense," Sforza said. "Skipping a few coffees, takeout meals or impulse purchases each month can free up money to put toward savings or retirement."
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3. Automate Your Retirement Savings
Once you identify even small savings, the next step is making it automatic. Instead of keeping all your money in your checking account, set up an automatic transfer into a retirement account.
"Set up an automatic transfer on payday so saving becomes routine," Sforza said. "People are far more successful when they 'pay themselves first.'"
4. Use Your 401(k) — Even at 1%
If you have access to a workplace retirement account, make sure you are taking advantage of it.
"Start with even 1% in your workplace retirement plan," Sforza said. "Contributing 1% to a 401(k) is often barely noticeable in a paycheck, and you can gradually increase it over time, especially after raises."
If your budget allows, contribute enough to receive your full employer match.
"If your employer offers a match, that’s essentially free money toward retirement," Sforza said.
5. Put Windfalls Toward Your Future
Unexpected cash can give your savings a quick boost.
"Tax refunds, bonuses or cash gifts are great opportunities to build retirement savings without impacting your day-to-day budget," she said. "Putting even a portion into a Roth IRA or savings account can create meaningful long-term growth."
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This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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