8 Ways You Will Be Able to Save BIG: Easily Add Thousands to Your Retirement Account

Retirement savings advice often revolves around the long term: save small amounts on a regular basis over many years, and you will be able to save a sizeable nest egg.

But what if you need to make up for lost time? What if you find yourself nearing retirement and just want to give that nest egg a little boost? There are ways you can easily save big bucks and add a few thousand extra to your retirement accounts.

Just check out these eight easy changes you could make right now.

1. Know How Much You Will Need and Set Goals

Perhaps the biggest roadblock to being able to save for retirement is not finding out exactly what you need to be doing for a secure retirement.  The majority of Americans do not have a retirement plan and they do not know how much they need in savings to be retired comfortably.

A recent survey by Wells Fargo found that people with a retirement plan were better able to achieve savings goals.  Those with a plan saved almost double than those without a plan.

Seems like it may be worth your while to take a minute to find out for yourself exactly how much you need for retirement and create a detailed retirement plan.  The NewRetirement retirement planning calculator makes it easy.

Start by entering basic information and get some initial feedback on where you stand. Then, add more detail and more accurately estimate for how much you need. Best of all, you can try an infinite number of scenarios. Forbes Magazine calls this system “a new approach to retirement planning” and it was named a best retirement calculator by the American Association of Individual Investor’s (AAII) and CanIRetireYet.

2. Buy Used

The fact is that buying a new car is a poor investment. New cars lose about 20% of their value as soon as you take ownership and their value drops anywhere from 6% to 13% annually.

Worse yet, according to Edmunds, the average length of a car loan has slowly crept up past five years, and Americans keep their cars, on average, just over six years. The result of these statistics is that a record percentage of people trade in cars that are worth less than what they owe on the loans. Nearly one-third of all vehicles offered for trade-in at U.S. dealerships are “underwater,” and their owners are adding the difference between their loan balance and the vehicle’s value to the price of the new car . . . and the vicious cycle of debt continues.

Is that new car smell really worth it? If you want to save big, drive your current vehicle into the ground. Today, a decently maintained vehicle should still be running long after the 100,000-mile mark. Continue to drive it long after paying off the loan, until a massive repair bill makes trading it in cheaper than paying to fix it.

When it’s time to trade in the clunker, buy a two- or three-year-old vehicle that has just come off a lease. You’ll pay far less than you would pay for the same one brand new, so your monthly payments, insurance, and registration fees will be lower.

How Much Will You Be Able to Save?: For the average priced car, you could probably add at least $7,000 to retirement savings by buying used.  Nevermind the additional savings from holding onto the car longer and having less debt. 

3. Don’t Overpay for Education

Parents want the best for their children, but what if “the best” includes an expensive private education? Are the benefits worth the price tag?  And it is a good trade off to spend on schooling at the expense of your own future?

The average private school tuition in the U.S. is $9,975. And while many parents cite academics as their primary reason for paying up for private school, if you live in an area with an excellent public school system, there may not be that much difference. According to a 2007 study from the Center for Education Policy, once key family background characteristics are considered, public high school students do as well as private school students on achievement tests in math, reading, science, and history. The study also found that public high school students were just as likely to attend college and be just as satisfied with their careers and just as likely to be engaged in civic activities at the age of 26. Instead, the study found, what really matters is parental involvement.

If paying private school tuition makes it difficult to save for retirement, keep in mind that many public schools offer a quality education. If you aren’t fortunate enough to live in a neighborhood with a thriving public school district, you may be better off relocating to a new area that does. If that’s not an option, choose a private school with a lower tuition and look into financial aid.

The cost/benefit comparison you do for elementary and secondary education will be much the same when it’s time to consider college.

How Much Will You Be Able to Save?: Depending on your costs, you could probably sock away an extra $10,000 a year per child, per year.

4. Staycation Instead of Vacation

The average by-plane vacation, including airfare, hotel, rental car, and taxes, is $5,000. Conversely, the average staycation costs just $500. While traveling can be life-changing, you might consider saving some money by trading in a vacation or two for a staycation closer to home. Besides the financial benefits, staycations can also be less stressful because you won’t be wasting time in an airport or dealing with airline security and missing luggage.

Depending on where you live, you may be able to find excellent off-season rates at nearby hotels. For instance, resorts in Phoenix and Scottsdale focus on attracting locals in the hot summer months by offering room, restaurant and spa deals for a fraction of what the same services would cost during peak tourism months.

So consider being a tourist in your own town. Staying home doesn’t have to mean sacrificing fun. Treat it like a real vacation: don’t answer work email, do housework, or run errands. Do some research online to find out what tourists like to see while visiting your area. There may be a beach, restaurant, museum, or trail just minutes away that you’ve never visited. You could be surprised at what’s unexplored in your own backyard.

How Much Will You Be Able to Save?: You can probably add $4,500 to your retirement accounts.

5. Downsize

In 2016, the average size of a newly constructed single-family home was 2,422 square feet. The amount of living space per person has nearly doubled since 1973! While many people are under the impression that bigger is better when it comes to housing, larger houses typically mean bigger mortgage payments and property taxes, costlier utilities, and more time and money spent on upkeep.

Downsizing might seem scary, but it can actually make your life considerably more stress-free. You’ll be forced to get rid of “stuff” you’ve probably had for years and never use. That “stuff” can weigh you down, physically financially, and psychologically.

How Much Will You Be Able to Save?: Your savings will be largely dependent on where you live and where you might move.  Housing prices vary greatly in different locations. However, the average cost per square foot in the United States is $139.  So, if you live in a 2,400 square foot house and reduce that by a quarter, you could potentially add: $83,00 to retirement savings!  Wow!

6. Eat In

In 2014, U.S. consumers spent $1.46 trillion on food and beverages, with nearly one-third of that spent on eating out. Dining out in restaurants can be fun and relaxing, but it’s also expensive.

Many households eat a meal outside of the home at least two or three times per week. The average meal outside the home costs $12.75 per person, compared to about $4 per person per meal for food prepared at home.

How Much Will You Be Able to Save?: Most people find that it’s not reasonable – or enjoyable – to completely eliminate dining out. But consider cutting back. For a family of four, one less meal each week can equate to a savings of $3,640 per year.

7. As Your Finances Improve, Put More Money into Savings

When you get a raise, pay off a debt, get a tax return or experience some other positive financial event, don’t just start spending more, put that money into retirement savings.

How Much Will You Be Able to Save?:  Let’s take a look at some averages:

• Salary: The average salary in the United States is $50,000 and the average yearly raise is 2.3% — bumping your salary more than $1,000 a year.  Can you add that $1,000 to retirement savings?
• Debt: The average American is paying off credit card debt at a rate of about $200 a month.  1) If this is you , you should probably try to accelerate these payments so you will pay less in interest. 2) When you do pay off the debt, you should strongly consider saving the same amount of money you were using on debt. On average, this could account for another $1,400 a year in savings.
• Tax Return: According to the I.R.S., the average tax return is around $3,000.  This is a big amount that you could add to savings!

8. Be Mindful and Purposeful with Your Savings

This article has already suggested 7 ways to potentially save over $100,000 for retirement in just one year.

However, this tip is the most important one of the article: It is not enough to not spend money.  You need to also mindfully save it for retirement.

So many of us try very hard to be frugal, but we end up frittering away these savings on other things instead of having the discipline to lock that money up into a retirement account for our future.

This is why it is so important to take assess your spending and saving each month and actually save money into retirement accounts.  As an added incentive, you can update your retirement plan whenever you add money into your savings and feel the satisfaction of getting closer and closer to your retirement goals.

Retirement Planning Calculator: Find out how much you need. See the impact of adding a bit more to savings!

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