It’s not too late to save for retirement

EVERYDAY CHEAPSKATE

Does the dreaded question “How much money will I need for retirement?” tie your stomach in knots? Millions of your peers are in the same boat, having saved little, if anything at all, to supplement their Social Security benefits during retirement.

Waiting until age 50 or 60 to start saving for retirement is not ideal. It’s late — but not too late. Anything you do now can improve your future. Here are some tips.

You don’t have the luxury to ease gently into the waters of retirement savings. Forget about the mistakes you’ve made in the past, and dive in. Focus your full attention on the years you have ahead to save.

Every situation is unique, but generally you need to keep working as long as you are healthy. You may be tempted to hang it up on the first day you’re able to draw Social Security benefits, but do you really want to join the 10 million American retirees who are currently struggling living on Social Security alone? Enough said.

Let’s say you are 50 years old and you begin immediately by placing $2,000 in a Roth IRA or a tax-deferred retirement account, which is invested in stocks, where it earns 8 percent annually (historically that’s been the long-term return for investing in stocks). You add $2,000 each following year (about $40 a week). In doing so, you’ll have about $210,000 by the time you really need it at age 80. Or if you double that, adding $4,000 a year ($80 a week), you’ll have $418,000 in your account on your 80th birthday.

There’s an unwritten rule of saving: You don’t miss what you don’t see. Set up an automatic deposit with your bank or employer, where a set amount is deducted from your paycheck and sent directly to your savings or investment account.

If things are already tight for you, finding that $40 or $80 a week might seem impossible. But it’s not. In fact, that money may be leaking out of your bank account completely undetected. To recover it, do this: For the next 30 days, keep a daily spending journal. Record every expenditure, no matter how small and no matter whether you wrote a check or paid with plastic. You need to see where you money is going. At the end of the month, divide your spending into categories like groceries, gasoline and utilities. Once you have everything in writing it will be easy to see where you can make significant cuts to free up the money you need for your savings.

If your employer offers a matching 401(k) plan, sign up to participate. For each dollar you contribute to the plan, your employer will match a set amount, like 3 percent, of your gross pay. That’s free money!

Take a look through your home for items you own that have ceased to bring joy to your life. Perhaps you have collectibles and antiques you could convert to cash to jumpstart your savings.

There is nothing poor about living frugally. Frugality carries a sense of good stewardship, of carefully managing one’s resources. Stop adding to debt. Stop living on credit. Being frugal is a good and responsible way to live.

So how much will you need in savings for retirement? That all depends on the expenses you bring with you to that season of your life. Get rid of your debt, cut expenses and start saving as if your life depends on it. It just might.