Think fast: Do you think you can save $700,000 for retirement?
Sounds unlikely, doesn’t it?
For those of us who live paycheck to paycheck, saving $700K sounds like a pipe dream. You might as well make plans to build a candy-coated castle in the clouds, right? Seems just as likely.
Ah, but what if I told you you could do it? Would you believe me?
What if I outlined a strategy to make it happen?
Here’s the one thing you should know: The sooner you start, the better.
The key to saving for retirement is to get serious about it as early as possible. It’s all about the power of compound interest.
Compound interest is interest you get paid on your interest. That way, your savings starts gathering interest like a snowball rolling downhill. With compound interest, your greatest asset is time.
To help you visualize this, check out the cool retirement calculator at Finhabits, an online investment service that’s geared toward first-time savers.
This low-cost digital retirement savings app can help you open an IRA (Individual Retirement Account) within minutes. Its mission is to encourage people to save for retirement — which is a good idea, since millions of Americans worry they’ll never, ever be able to retire.
To encourage you to build your savings, Finhabits will deposit $20 into your new account when you contribute $500 within the first three months of opening your Finhabits IRA.
To get to this handy retirement calculator, go to the Finhabits website and click “Get Started.”
Play around with the calculator. It’s fun!
It asks you for three things: Your age, how much money you can save per week and whether your investment risk level is conservative, moderate or aggressive.
Then it projects how much money you’ll have socked away by the time you turn 62. Its projections are based on Finhabits’ investment plans.
Here are some of the results we got:
- You’re 20 years old. You set aside a certain amount of money each week and invest it in the stock market. (This is the “aggressive” risk setting.) In order to save $700,000 for retirement, you have to set aside $74 a week.
- You start saving when you’re 25. In order to have that same $700,000 stocked away for retirement, you have to save $102 a week.
- You wait until you’re 30 to get started. If you set aside that same $102 per week, you’ll end up with only $500,000, not $700,000. See how big of a difference just five years makes?
Seeing is Believing, So See For Yourself
Playing around with the calculator is really eye-opening. You can see for yourself how much difference it’ll make if you wait too long to start saving for retirement.
Sure, we all know in sort of a vague, general way that the more money you save, the better off you’ll be in your golden years.
But this calculator really puts it in black and white. It uses hard figures to spell out the effects your decisions today will have down the line.
3 Feasible Ways to Make $50 a Week
But, but, but … you’re saying. How do I set aside $75 a week?
You can probably save $25 a week by gritting your teeth and just doing it. Spend less. Go without that expensive latte every morning.
Beyond that, we have three ideas for making and/or saving that extra $50 per week. For maximum results, try all three.
Lyft: Hustle up some extra cash by driving for Lyft on your own schedule. Lyft keeps expanding and says its platform now covers 94% of the country..
Trim: Install Trim, a Facebook messenger bot that will negotiate your cable or internet bills down for you. It works with Comcast, Time Warner, Charter and other major providers. You sign up with Facebook, then upload a PDF of your most recent bill, and Trim’s AI-powered system gets to work. It’ll keep negotiating until it saves you money. Put the savings toward retirement.
Chase Freedom Unlimited: If you don’t have a cash-back credit card and can handle the responsibility of paying it off in full each month, you should get one. Here’s an option we like: It’s the Chase Freedom Unlimited card. Its claim to fame? You’ll earn an unlimited 1.5% cash back on all your purchases. Plus, if you spend $500 in your first three months of opening the card (hi, groceries), you’ll pocket a $150 bonus. There’s no annual fee, and the cash-back rewards don’t expire.
We checked Credible’s annual rewards calculator, and it estimates $417 in annual rewards based on our spending habits.* (You can enter your unique spending habits and see what you’d earn, too.) Get signed up — and 0% intro APR for 15 months — here.
*Annual Rewards amounts will change based on the amounts you enter. The monthly spending category names and definitions may vary among issuers, and categories may not align one-to-one.
The information for the Chase Freedom Unlimited card has been collected independently by Codetic. Opinions expressed here are the author’s alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. Codetic is a partner of Credible.
Take these steps, and maybe you’ll be able to retire after all.
Finhabits’ retirement calculator will help point the way. And once you’ve gotten a look at the numbers, the service will help you open an IRA.
Carlos Garcia, the financial entrepreneur who launched Finhabits, says that no matter how much you put away for retirement each week, it’s best to just do it and not put off saving.
Get started today. The sooner you start, the better off you’ll be.
Advertiser Disclosure: Many of the credit card offers that appear on this site are from credit card companies from which Codetic receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). We do not feature all available credit card offers or all credit card issuers. The Finhabits’ retirement calculator projects results for demonstration purposes only. All securities involve risk and may result in loss.
Mike Brassfield ([email protected]) is a senior writer at Codetic. He’d like to retire someday.
This article contains general information and explains options you may have, but it is not intended to be investment advice or a personal recommendation. We can’t personalize articles for our readers, so your situation may vary from the one discussed here. Please seek a licensed professional for tax advice, legal advice, financial planning advice or investment advice.