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Small Changes, Big Results: What You Can Do to Cut Costs and Plan for Retirement

BusinessPersonal FinanceSmall Changes, Big Results: What You Can Do to Cut Costs and Plan for Retirement
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For many Americans, the importance of planning for retirement has become an essential financial priority in recent years as many retirees gear up to exit the workforce in the coming years.

As people get older, Retirement Planning Takes a Better Place among other financial priorities. At a time where the cost of living is on the rise, against the backdrop of an uncertain future, planning for your financial future as you age becomes challenging.

retirement status in america

In recent years, several studies and surveys have found that it is becoming more and more difficult for Americans to save. boost their retirement savings due to ongoing economic risks

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one in GOBankingRates Survey About 32.9% of 1,000 Americans aged 18 and older had no more than $100 in their savings account. A similar study published in 2022 found that about 22% of Americans had less than $100 in their savings accounts.

There is no right time or age to start planning or saving for the future, especially when there are so many risks in everything these days.

according to a Northwestern Mutual 2021 Planning and Progress StudyAmericans have been increasing their retirement savings in recent years, with the average retirement savings account growing 13% from $87,500 to $98,800.

According to PwC, people aged 55 to 64 have an average savings balance of $120,000, while US adults under 35 currently have an average savings balance of $120,000, despite a spurt in savings efforts among those aged 55 to 64. has an average account balance of $12,300. reports,

Several unplanned scenarios have forced many people into premature retirement over the years. Those who were unable to save and plan properly have exited retirement and back into the workforce in recent years as a way to sustain themselves financially.

The average retirement age has increased from 60 in 1990 to 66 in 2021 and most adults are now living longer than before, if you don’t start planning well before retirement age Enjoying life can be expensive.

Retirement Calculation – Deducting Costs Before Retirement

Economic uncertainty and rising costs have prompted American adults to start saving early in their careers.

From this, research Shows that for younger earners, those born between 1981 and 1985, the retirement outlook is more optimistic, as experts predict they’ll have the highest inflation-adjusted average annual income by the time they reach 70. .

Early millennials, as they are called, will see their annual income increase by 22% after entering retirement compared to pre-boomers, or workers born between 1941 and 1945.

Generation Z, those aged 19 to 25, are even better at saving for their future, with most of them putting away an average of 14% of their income, according to a blackrock study Published last year.

The younger generation has more confidence and more optimism when it comes to planning for their retirement and future. With more of them now taking a place in the workforce, financial priorities will soon begin to change, as many look to build a nest egg that can sustain them after retirement.

Adhering to a strict budget, cutting unnecessary expenses, and learning to work with money are just some of the things many people are doing to reduce costs as they supplement their retirement savings.

reduce high interest debt

Inflationary pressures for much of the past year have seen a growing number of American adults leaning on credit cards and personal loans to help pay for everyday expenses. By 2023, close to half – 46% – of American adults month to month loanBe it credit cards or other interest-bearing loans.

Keeping expenses to a minimum can start by reducing high-interest debt such as credit cards or personal loans. For most people in the working class, while it is still possible to afford it, it is suggested that you minimize any interest debt you have while you are still receiving a monthly income.

Having this financial safety net means you are in a position to reduce your future expenses and direct more cash towards more important financial goals Like saving for retirement.

Keeping control of your debt can be a challenge, as these expenses tend to accumulate over time, so it is advisable to first see which payments can be settled first, and whether the payment term can be shortened. It is possible to do so that it is ‘no’. t stretch into your retirement years.

Assess Your Insurance Coverage

Another way to cut expenses early in your career is to assess your insurance coverage. As you grow older, health insurance coverage becomes an important product that you need to carry with you till your golden years.

Taking the necessary steps now to ensure the right insurance coverage will help you better understand the type of product you should be taking and what you are paying for.

Often people take insurance coverage later in life, when they are in a comfortable financial position. While it made sense at the time, insurance products get more expensive as you age.

While the difference in products may add up to a few dollars each month, they add up quickly over the long term. Talking to a financial professional or broker will give you better guidance about which insurance products are best for someone in your situation, and give you the most value. Benefits once you step into retirement,

Take Control of Student Loans

Student loan debt is a major burden for most American adults. According to Education Data InitiativeAverage federal student loan debt is $36,575 per borrower, while private student loan debt averages $54,921 per borrower.

As of the beginning of this year, approximately 45.3 million adults in the U.S. have some form of student loan debt, with the vast majority — 92% — having federal student loan debt.

average federal student loan debt by year

Carrying this debt into retirement is not only a financial burden, but it puts a strain on your retirement savings plans if you don’t manage to prioritize these payments.

Taking greater ownership of your student loan debt now will help you in the long term, allowing you to direct more of your financial efforts later in life. setting up your nest egg, If you’re not sure how to manage your student loans or are struggling to make payments, contact a financial advisor for guidance, or apply for student loan relief assistance.

If you currently work in the public sector, or for a government entity, see if there are student loan relief programs you can apply for to help lighten the burden.

pay off your mortgage

Mortgage rates have nearly doubled in a year, as the Federal Reserve continues with its aggressive monetary tightening, making it more expensive for consumers to borrow money.

mid January 2023, benchmark 30 year mortgage rate 6.48%, up from 3.22% in the same time a year ago. According to the US Census Bureau, average monthly mortgage payment Sits around $1,100.

Americans have seen home prices rise in recent months, as demand rises, supply dwindles, and the cost of labor and building materials continues to rise.

Despite these challenges, many adults still hold mortgages until they retire. Amazingly enough, 44% of Americans aged 60 to 70 have a mortgage after retirement, with 17% saying they won’t be able to pay it off in full. american association for retirees,

how long before retirees pay off their mortgage

Many soon-to-be retirees and even those still in the workforce are living with the high cost-burden of their mortgages. Being proactive about reducing these settlements while you’re still drawing paychecks each month can help you shorten your down payment period, but also give you some breathing room. Put this money in your retirement fund,

Many different financial programs exist to help homeowners meet their mortgage payment obligations, and often banks provide clearer and more concise financial guidance. Take the opportunity to settle these payments sooner, and take advantage of lower rates where possible.

Reevaluate Your Car Insurance

Vehicle insurance increases over the years, and insurance providers adjust payments based on inflation and the market value of your vehicle.

Over time, you may end up paying a little more for your car insurance even though you still have the same car, or maybe less. price for car insurance This is calculated by your insurance provider using the Actual Cash Value (ACV) of your car to determine how much they will be required to pay in the event of an accident or need to make any repairs on the vehicle.

What some insurers have done in the recent past is to offer lower premiums for older customers, to help lighten the burden of spending on their cars. This would make it much cheaper and perhaps more affordable for some retirees or car owners to have more than one car.

Additionally, you can approach your current insurance provider to help you pay a more manageable insurance premium based on a number of factors such as driving experience, age and condition of the car, where it is parked overnight. how often it is used, and who may be the primary driver of the car.

These factors, along with other factors, will affect the total monthly amount you will need to pay for your insurance. It is advised that you get your auto insurance assessed annually to ensure that you get the most budget-friendly deal available to you.

Cut down on unnecessary expenses and subscriptions

Another useful and smart way to reduce your expenses at the beginning of your career is to avoid any unnecessary expenses like subscriptions, streaming services and internet bills.

While some may argue that these are necessary for their daily lifestyle and entertainment. Latest figures show average American spends roughly $114 on video download and streaming servicesNearly a four-point increase from 2016.

Despite witnessing an increasing number of online consumers, internet bills have also increased over the years.

typical american home Pays between $40 and $100 per month for Internet services, with an average of $64 per month. The lowest internet packages can cost households closer to $58 per month, even when adjusted for taxes and other service charges.

While there is a need and use of these products or services in everyday households, it is often best to keep these costs to a minimum. Splitting expenses among those living in the same house or apartment can be one way to reduce expenses.

Another might be to have fewer streaming or subscriptions and only keep essential products that have a purpose.

Be sure to research the best possible deals for these types of services, and take a moment to review your account statements from time to time so you can see where your income is being spent.

You can always opt out or cancel these subscriptions, but be sure to read the fine print first so you don’t end up paying high cancellation fees, or keep paying for something you no longer use.


Planning for retirement has become an essential financial priority for many Americans. For those who still have plenty of time before retirement age, it’s best to plan and strategize as much as possible to make sure you’re on track with your financial and savings goals.

On the other hand, for individuals who may soon be out of the workforce, and in retirement, making sure they can make some cuts to reduce unnecessary expenses while also boosting their retirement portfolio. The best way that you can enjoy your golden years without any financial stress.

There is no right time to start saving for retirement, the sooner you have a savings plan in place, the better. Take control of your finances, and try to break down costs into smaller, and reduce costs that can be directed into your retirement funds.

Post Small Changes, Big Results: What You Can Do to Cut Costs and Plan for Retirement first appeared payable,

The views and opinions expressed here are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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