Daily Gains Letter

Four Ways to Start Saving for Retirement Today

By for Daily Gains Letter |

DL_Mohammad_5One question usually arises when it comes to retirement planning: if you are in your early 50s, is it too late to start saving for retirement? No; fortunately, it is still possible to start now. A lot of people get discouraged by the fact that they haven’t put aside anything for their retirement, and when they come to a certain age, they just lose hope and don’t even try anymore.

Saving for retirement is important if you want to live your life worry-free during your later years. Just to bring in some perspective, 36% of all Americans don’t save anything for their retirement. What is more troublesome is that 35% of people who are 65 years or older completely rely on Social Security. (Source: “Retirement Statistics,” Statistic Brain, February 7, 2012, last accessed December 18, 2012.)

Although starting to save for retirement in the later years of life isn’t ideal, it is certainly possible to begin now for a comfortable retirement. If a person starts early, they just simply have more time.

Keep in mind that as you start saving for retirement in your later years, it may require a lot of changes to your lifestyle.

So, where does one start? Once again, it depends on each person, but there are certain steps a person might take to start saving for retirement.

1. Budgeting

It is necessary to know where the money comes from, and where it goes. Budgeting helps in that regard. Once a person has made a budget, saving can become easy, and it is easy to manage where the money is coming from and where it will go.

Most people might just have a single source of income. They need to budget wisely, because with that income, they will have to pay off all the expenses at the end of the day and still be able to save.

2. Saving Before Spending

Say, for example, you earn $2,000 a month. As soon as you get your paycheck, take 10% of it, and put it toward your retirement. Use the remaining 90% to cover your expenses.

Why bother doing this? This way, a person is forced to save before spending. At the same time, saving a little bit adds up over time.

3. Paying off High-Interest Debt

This may sound a little odd when talking about saving, but paying off debt will ultimately help in saving. How is it even possible? Think of it this way; say you have credit card debt, and you pay higher interest on it. If you pay it first, the extra amount of money you pay for high interest can eventually go toward your retirement savings.

For instance, you owe $5,000 of credit card debt, and you pay 24% interest on it per year. In just one year, you will pay interest of $1,200 if you only make minimum payments.

4. Invest Accordingly

What happens when you save 10% of your income every month? Should it just sit in your savings account, where you earn next to no interest after adjusting for inflation?

As the saving continues, a person should also focus on the investing aspects of it. If you don’t invest the money and keep saving, when the time of retirement comes, you will only have what you saved—even less because of inflation—and you will miss out on possible gains you could have earned over time.

To give you some idea, pretend that you have $10,000, and you invest it at two-percent interest, compounded semi-annually. You also don’t make any additional amount. By the end of the first year, you will have $10,201—a gain of 2.01%. If you leave it there for 35 years, the same $10,000 will double in value. The higher the interest rate, the quicker you double your money.


Obviously, not all plans work as originally anticipated, but when it comes to saving for retirement, especially in the later years, discipline is, hands down, the most important thing to consider. It can be the difference between having money by the time of retirement and relying completely on social security.

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