Life Hacks

3 ways to make sure you have 6 times your income saved by age 50

June 8th, 2021

When it comes to planning for retirement, it’s always a good idea to start saving early. In fact, the earlier you do it, the better off you’ll be.

How much money do you need to set aside to retire comfortably?

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Unsplash-Jp Vallery Source: Unsplash-Jp Vallery

Experts suggest that you should have around six times your income before your 50th birthday so you can retire when you hit your 60th birthday.

For someone who’s just starting, that may sound overwhelming, particularly if you’re doing it late.

Fortunately, there are things you can do to boost your savings. Check out the following tips below:

1. Don’t forget to pay yourself first.

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Unsplash-Alexander Mils Source: Unsplash-Alexander Mils

If you are 25 years old, start setting aside 15% of your income. Save the money before you pay everything else.

You can start a savings plan in a bank. Save the money directly after receiving your paycheck. Another option is to contribute to your 401(k).

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Unsplash-Sharon McCutcheon Source: Unsplash-Sharon McCutcheon

Avoid depositing the money into your checking account. You might just end up spending all of it buying things you don’t really need.

For this to work, you can try automating your savings. This way, you won’t have to think about it.

2. Start today.

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Unsplash-Damir Spanic Source: Unsplash-Damir Spanic

If you haven’t started saving for your retirement, now is the best time to do it.

By putting away money as early as now, a 25-year-old who’s investing $75 monthly can accumulate more money and assets by the time he reaches 65 years old than a 35-year-old investing a hundred dollars monthly.

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Unsplash-Nick Pampoukidis Source: Unsplash-Nick Pampoukidis

Now, you don’t have to save a huge chunk of your salary to have enough money for retirement. You can start small and it will still make a huge difference. That’s as long as you start early.

3. Know where your money goes.

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Unsplash-Kelly Sikkema Source: Unsplash-Kelly Sikkema

Take a good look at your budget. See how your money comes in and where it’s going.

This will help you understand how much money you’re spending in a day or in a week. Once you know where your money goes, you can cut back on areas where you spend more than you’re supposed to.

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Unsplash-Pickawood Source: Unsplash-Pickawood

For example, you can take a look at your monthly credit card statement. Do you really need that bag? Is a new pair of jeans necessary? Should you really pay for that subscription?

Those things might sound like small expenses. But when you add them together, you’ll find that they are the ones that are hurting your finances.

Bonus tip: Stash away extra funds.

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Unsplash-Allef Vinicius Source: Unsplash-Allef Vinicius

Whenever you receive extra money, make sure you don’t spend it. Each time you receive an increase in your contribution percentage or a raise, save it. You don’t always have to spend your salary bonus or tax refund buying things you don’t need.

You can set them aside for your retirement plan. Or you can use them to build your emergency fund.

However, that doesn’t mean that you can’t buy something for yourself. It’s still a good idea to treat yourself to something small every now and then.

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Source: Investopedia, Fidelity Investments