Best Ways To Save For Retirement With Low Income

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If you’ve just started out and don’t earn much – don’t worry! Saving for retirement on a small or low income is very possible: Here are some suggestions on how to save for retirement even if you don’t earn enough: 

  • Start Small

To enjoy a comfortable retirement, it is said that you should at least save 15% of your income. However, for people with lower income you can start by contributing as little as 1% of your salary. You can increase the savings by another 1% every quarter or each time you get an increment. Saving a small amount aside won’t make much of a difference on your other expenses, but over the long term, you will have a substantial amount to retire in peace. 

  • Get Hold Of Free Money

If you have a 401(k) or 403(b) and are being offered a savings match by your employer, grab it! Do not make the mistake of not taking an employer-sponsored match. It’s free money that can help you save enough for your retirement. Set a goal to contribute just enough to get the match.

  • Open An IRA

If you’re self-employed or don’t have a 401(k) plan through your employer, you can open a traditional and/or Roth IRA via your bank or a brokerage firm. The savings through an IRA may not be as high as a 401(k) or 403(b), but you can still save enough over time. As your income grows, you can open both an IRA and 401(k). That way you can considerably increase your retirement savings as well as enjoy the tax benefits offered by these accounts.

  • Activate Auto-debit

Automating your transfers is one of the best ways to take the stress out of saving. 401(k) and 403(b) deposits are generally auto-debited from your paycheck. You can also auto-debit your paycheck directly into your retirement savings accounts. If you’re unable to automate your deposits, you can make a payroll request. For instance, where people have inconsistent income, they can set reminders on the phone to make those transfers in time!  Putting off retirement savings until you make enough money is not a good idea. This means you’ll have to work longer than expected and rely on government assistance in order to survive. Starting with what you have, no matter how small the amount, will add up in a big way over the long term.