Half of Americans Can’t Afford Retirement — Start with These 4 Things

You’ve probably heard there’s a retirement crisis in America. In study after study, half of Americans expect to struggle financially in their golden years because they won’t have enough retirement savings.

Did you know it’s getting even worse, though? Now it’s more than half of Americans, thanks to the COVID-19 pandemic.

Here’s an example: Boston College has a Center for Retirement Research, which puts together a National Retirement Risk Index. Before the pandemic, it said 50 percent of U.S. households probably won’t be able to maintain their standard of living after they stop working. Now, after the pandemic has tanked the economy, that number has jumped to 55 percent.

So what about you? What can you do? 

We have four suggestions:

1. Maximize Your 401(k)

If your employer offers a 401(k) plan, contributing to it is a no-brainer. It reduces your taxable income, keeping more money in your pocket and out of Uncle Sam’s. And your employer’s 401(k) match is basically a raise.

At the very least, you should be contributing enough to get your employer’s full match. If your employer matches your contributions up to 4 percent, make sure you get every penny.

Your 401(k) isn’t just savings; it’s an investment. Through the magic of compound interest, it can potentially grow a lot with time. 

If you invest $25 a week — or $1,300 a year — starting when you’re 21, for example, a typical return of 7 percent would give you more than $25,000 a year to live on in retirement. If your employer matches your investment, you only have to give up $12.50 a week.

2. Wipe Out Your Expensive Credit Card Debt  

Credit card debt will eat up your savings. It’s the most expensive kind of debt there is, thanks to the absurdly high interest rates credit card companies charge.

A free website called AmOne can help you wipe out your credit card debt faster, potentially saving you thousands of dollars in the long run. That’s money you could bank for retirement.

AmOne will match you with a low-interest loan to pay off all your credit cards at once. Its interest rates start at 3.99 percent — way lower than the 20 percent or more you’re probably paying your credit card company.

Plus, you’ll be debt-free that much faster.

AmOne keeps your information confidential and secure, which is probably why after 20 years in business, it still has an A+ rating with the Better Business Bureau.

It takes two minutes to see if you qualify for up to $50,000. 

3. Start Investing

If you don’t have access to a 401(k) plan through your employer, you’ll have to save for retirement by yourself. Consider opening an IRA, which is an individual retirement account that’s not attached to an employer. It stays with you regardless of where you live and work. 

You contribute when it’s convenient for you and choose what mutual funds, stocks and/or bonds you want to invest your money in. 

If that sounds intimidating, start small and simple. Investing doesn’t require you to immediately plow thousands of dollars into the stock market. In fact, you can get started with as little as $1.*

We like a micro-investing app called Stash because it lets you choose from hundreds of stocks and funds to build your own investment portfolio. But it makes it simple by breaking them down into categories based on your personal goals. Want to invest conservatively right now? Totally get it! Want to dip in with moderate or aggressive risk? Do what you feel.

Plus, with Stash, you’re able to invest in fractions of shares, which means you can invest in funds you wouldn’t normally be able to afford.

If you sign up now (it takes two minutes), Stash will give you $5 after you add $5 to your investment account. Subscription plans start at $1 a month.**

4. Find Ways to Reduce Your Monthly Expenses

Although some of your monthly bills are set in stone, there are plenty of other necessary expenses you can reduce to help pad your bank account. Some can even be permanent fixes — like your car insurance.

Car insurance rates fluctuate, and you’re likely paying more than you should be right now. Because you’re not in a binding contract, look into other providers to see if you can get the same coverage for less money. 

A free website called Savvy will help you find the best rates — in just 30 seconds. In fact, it saves people an average of $826/year.

All you have to do is connect your current insurance, then Savvy will search hundreds of insurers for a better price on the same coverage. It’ll even help you cancel your old policy and get you a refund from your current insurer. Best yet: This is totally free.

If you find a better deal, you can switch right away and don’t have to wait for your next renewal or even your next payment.

5. Try the Budget for People Who Hate Budgets

If you’re worried about saving enough money for retirement, the 50/30/20 budgeting method is one of the simplest ways to get your spending in check and hit your financial goals. No 100-line spreadsheets or major lifestyle changes required.

Here’s how it works: Take your total after-tax income each month, and divide it in half. That’s your essentials budget (50 percent). Take the rest, and divide it into personal spending (30 percent) and financial goals (20 percent).

Let’s break it down: That’s 50 percent for things like utilities, groceries, medications, minimum debt payments and other essential spending. Then there’s 30 percent for fun: Thai takeout, your Netflix subscription, dressing up a skeleton on your lawn for Halloween.

That leaves 20 percent for your financial goals, like additional debt-reduction payments (anything above the minimum monthly payment) along with retirement savings and investments.

If you can get rid of your debt, you’ll have that much more to invest and save for retirement.

And when retirement comes, you can be part of the 50 percent of people who won’t have to worry so much.

6. Find Creative Ways to Make Money From Home

As you approach retirement, the idea is you stop working, right? But there are still some creative ways you can make money from home — while setting your own hours and being your own boss.

For instance, you could earn up to $69 an hour by starting your own bookkeeping business, according to Intuit, the creator of QuickBooks.

You don’t have to be an accountant or good at calculus to be successful at bookkeeping. As long as you’re motivated, a company called Bookkeepers.com will teach you everything you need to know. It’s one of the leading training courses in the field, and it even gives you the first three classes for free.

It’s helped thousands of people launch their own businesses, including Daniel Honan, a military veteran and former painter. He never considered starting his own company, but he signed up for Bookkeepers.com, and now he’s making $50,000 a year.

It only took him three months to get started, taking one class a week. Oh, and he makes his own schedule, earns up to $69 an hour and is able to spend more time with his wife than ever.

If you’re just a little curious, you just have to submit your email address here to take the first free class. If you stick with it, you could be running your own business in just a few months.

There are plenty of resources out there to help you get started. It’s worth scoping out your options!

*For Securities priced over $1,000, purchase of fractional shares starts at $0.05.

**You’ll also bear the standard fees and expenses reflected in the pricing of the ETFs in your account, plus fees for various ancillary services charged by Stash and the custodian.

First for Women has partnered with The Penny Hoarder to bring you expert money saving tips like these.

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