While 65 is considered the traditional retirement age, more Americans are finding it difficult to retire with the income they need to support themselves for a potential 30 years or more in retirement. Two factors are at play: 1) longer average lifespans mean retirement income will need to stretch further than it did for previous generations, and 2) most Americans aren’t saving enough during their working years. A study from the Economic Policy Institute (EPI) found that nearly half of American families have no money stashed away for retirement. What’s more, the median amount working-age families (ages 32 to 61 years old) have saved for emergencies or other goals is only $5,000.1
Whether you’re looking to boost cash flow or save more for retirement in the new year, begin by examining your current spending habits. Most people don’t realize how small lifestyle changes made over time can gradually chip away at cash flow. Start by looking at conveniences vs. necessities. Is paying $3 for a morning cup of coffee instead of grabbing a travel mug on the way out the door a true necessity? Are you paying for things you don’t use, such as premium cable channels or gym memberships?
By taking simple, relatively painless steps, you can rebalance your lifestyle needs and savings priorities to put more cash back in your own pocket and subsequently your savings accounts. The following tips can help you get started saving more today:
- Drop costly cable or satellite TV packages for less expensive online and streaming capabilities.
- Cancel any unused or underused print and online subscriptions, apps and gym memberships.
- Plan weekly meals ahead of time. Dining out or picking up carryout several times a week can add up quickly. Instead, make a list and shop once a week for all the ingredients you need to quickly and easily put meals on the table.
- Lower home heating and air conditioning bills by applying new weather stripping around drafty doors and windows, reversing the direction of ceiling fans seasonally, and minimizing the use of bathroom and kitchen fans which draw air out of your home, making your heating and air conditioning systems work harder.
- Switch out incandescent lightbulbs for compact fluorescent (CFL) or LED bulbs. CFLs are inexpensive and use a quarter of the energy of incandescent bulbs. LEDs produce a warm glow without getting hot to the touch and can last for decades, making their higher price cost effective over time.
- Cut out the middle-man when traveling and book directly. Sites and services like Vacation Rental by Owner (VRBO), HomeAway and Airbnb can help you save on hefty booking and related fees charged by rental management companies.
- Reevaluate your insurance needs every few years. A comprehensive insurance review conducted by an experienced financial advisor can help determine if coverages and costs still meet your needs and budget.
Need additional help to improve cash flow or determine a savings and investment strategy aligned with your goals? Contact our office today to schedule time to talk.