Struggling with student loan debt? You’re not alone. According to statistics from the Federal Reserve, Americans owe more than $1.4 trillion in student loan debt. That’s nearly double what they owe on credit cards. More than 40 percent of Americans have student loans, and 11 percent of them are in delinquent status on those obligations.1
If you’re struggling to pay off student loans, saving for retirement may not be at the top of your priority list. After all, you may have years or even decades until retirement. You might feel urgency to pay off your student loans before you begin saving for the future.
That approach could be a mistake, however. While retirement may be years in the future, it’s important to remember that you could spend decades being retired. That means you’ll need enough savings to fund 20 or even 30 years’ worth of living expenses.
The only way to accumulate the necessary level of assets is to start saving as soon as possible, even if you are still paying for student loans. Fortunately, with careful planning, you can tackle both objectives. Below are a few tips to help you do so:
Stick to a budget.
According to a recent study, only 40 percent of Americans use a budget, even though it’s a powerful financial tool.2 If you don’t use a budget, now may be the time to start. A budget can help you analyze your spending and make more informed choices with regard to your purchases.
In developing your budget, you may find that you’re overspending on things such as dining out or entertainment. Cuts in those areas may give you the extra money you need to contribute to a retirement account. There are plenty of apps and software that can help you budget, but a spreadsheet or pen and paper can also be effective.
Take advantage of your employer match.
Do you participate in an employer-sponsored 401(k) plan? If so, that may be your most effective vehicle for accumulating retirement assets. That’s especially true if your employer offers a matching contribution. Many employers will match up to a certain percentage of their employees’ contributions. For example, your employer may match contributions up to the first 3 percent of your salary.
Find out your employer’s matching policy, and then contribute at least enough to get the full match contribution. Those matching funds could substantially increase your savings rate. It could even double your retirement contribution amount. That’s an easy way to save more money without impacting your budget.
Make your savings automatic.
You may think you can’t afford to save any more money for retirement. However, it’s possible that you’re simply choosing to use the money for other obligations. What if you removed the choice and simply made retirement a mandatory expense, like utilities or your mortgage?
Automate a contribution from your paycheck or bank account to your IRA. You may notice the hit to your budget at first. Over time, however, you will likely adjust your spending to accommodate the contribution.
Ready to develop your retirement savings strategy? Let’s talk about it. Contact us today at Safe Retirement Strategies. We can help you analyze your needs and implement a plan. Let’s connect soon and start the conversation.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
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