5 Ways to Grow Retirement Savings and Enjoy a Latte, Too
BY ERIN EL ISSA
“Skip your daily latte” is a popular supposed cure for all of life’s financial ills. Have student loan debt? Skip your daily latte to pay it off. Can’t save for retirement? Skip your daily latte! Drowning in kids’ expenses? Skip the latte! The problem here is twofold. First, 42% of Americans say they currently make their daily coffee at home instead of buying it at a restaurant or cafe, according to a recent NerdWallet survey. So the advice to simply skip that latte is irrelevant for many. Second, while skipping your workday latte and redirecting that cash toward retirement savings or another financial goal would help, there are other, more effective actions you can take to boost your savings while staying caffeinated. Here are five options for increasing your retirement contributions in the new year.
RENT BELOW YOUR MEANS
Saving on rent adds up Here’s how much you would increase your retirement savings over 20 years if you saved $50, $100 or $500 per month on rent and invested the extra cash.
More than 2 in 5 Americans (43%) say that housing expenses are a barrier to their ability to save for retirement. If you’re able to spend slightly less than your budget allows for housing and direct that extra cash to your retirement fund, it can add up quickly. Whether you choose to rent a smaller place, live in a less trendy neighborhood or get a roommate to share housing costs, the savings can make a big impact if you invest it for your future.
$50 a month
$100 a month
$500 a month
$0 $20K $40K $60K $80K $100K $120K
Source: NerdWallet analysis, compounded annually at 6%
Powered by FlippingBook