SAVE FOR YOUR RETIREMENT

Saving for retirement is a major challenge for many people these days and we have pretty low retirement preparedness levels across the board in our country.

Sometimes we spend more time and energy avoiding our finances than is necessary. Instead of spinning our wheels and doing the same things to get the same old results, maybe we should redirect our time and resources to more meaningful actions that could become difference makers.

In the spirit of trying to find ways to make our financial lives seem a little less complicated, let us take a look at some easy life hacks that can help you build up your retirement savings and also your own sense of retirement confidence.

You may live quite a long time in retirement. Longer than you expect, in fact. If you are one of the many people who underestimate how long you will live in retirement, you may find yourself running out of money. Some people find that their expenses decrease in retirement - their house is paid off and children have moved away. But many others find that their dreams for retirement come with big price tags. Depending on your retirement goals, you may need a minimum of 70 to 80 percent of your pre-retirement income. Inflation may take a bite out of your retirement savings. Remember your money may buy a lot less in the future than it does today.

Put Your Savings On Autopilot And Pay Yourself First

Make savings for retirement easy. It would be nice if we all made rational decisions with our money. But there is a know-doing gap. That is why it is important to automate smart saving behaviors whenever possible. Paying yourself first means that you do not give yourself a chance to make your money disappear in all the wrong places.

Once you have determined how much of your income you want to contribute to a retirement plan, it is easy to set and to forget your savings. You could set up an automatic contribution directly from your bank account every month after your salary has been paid.

There are other ways to make savings easy. One method is to take advantage of a contribution rate escalator tool if offered by your retirement plan provider. These small automatic increases to how much you save, can help you gradually raise your retirement plan contributions over time.

In addition to setting up direct transfer to savings once your salary is paid, consider using a debit card that rounds up your purchases and put that money in a savings account separate from your day to day checking account for living expenses. Another tip to remember when you make cash purchases is to put your extra change in a piggy bank or jar. At the end of the year, the extra savings can go towards your retirement fund.

Do Not Allow Yourself To Get Distracted By Debt

Excessive debt is one of the biggest obstacles on the path to retirement. If you already have some debt-related headaches, now is the time to turn that around with a debt reduction plan. But if you are not there yet, avoid allowing the debt to derail your retirement plan.

Some forms of debt such as mortgage and student loans can be better than others when they are incorporated into your overall financial life plan. On the other hand credit card debt, high-interest personal loans and auto loans can create a vicious cycle of debt payments that make retirement appear impossible at times.

Here are a few simple tips to help you avoid the debt distraction:

• be a little different from the average human and create a personal spending plan
• always pay off your credit card balances in full each month
• wait a day or two before making any large purchases
• try to keep your basic living expenses below 50% of your total household income
• make discretionary purchases with cash instead on credit

Keep Up The Good Habits And Eliminate The Bad Ones

​It is easy to lose focus on the big picture of our financial life plan when extra income appears in our budget after paying off loans or credit card balances. Instead of spending that extra cash that you already have which  was not there before, pretend it is still not there and save it instead. Transfer the funds to your retirement account instead of allowing your lifestyle creep to hurt your ability to save. You should never miss the money because you have already got used to it not being there.

When you pay off an auto loan, consider keeping your vehicle for a few extra years before finding a replacement. You should set aside most of your savings in a car replacement. 

Learn To Cook

The simple act of learning to cook can help you save thousands of extra ringgit for retirement. You do not have to be a gourmet chef to put together healthy meals that are easy to prepare and taste good. The best part of being more proactive in the kitchen is that you can reduce expenses related to dining out. This helps free up extra ringgit that can go to your retirement account. A healthy diet also helps improve your overall health and this can significantly reduce your medical costs later on during your retirement years.

Use Automatic Bill Payment

Never miss a bill payment by making the entire process of paying your monthly expenses automatic. If you have ever missed payments in the past this can lead to significant savings over time by eliminating late payment fees. Since paying creditors on time is a major factor in determining credit scores the process of making bill payments automatic may also help lower future borrowing costs for mortgages or vehicle loans.

Avoid Spending Future Pay Rise And Bonuses

There is a fine line between living in the moment and planning for the future, It is alright to reward yourself but remember to do so in moderation and put a hefty chuck of your pay increases or other windfall amounts into your retirement savings. It takes a little discipline upfront, but if you get a raise or a bonus, you should put the extra money into your retirement fund.

Just focus on finding extra money in your budget, eliminate costly debt payments and automate the savings and payment processes. Once you automate these smart savings and debt avoidance habits you will gain a lot of positive momentum.

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