How to Save for Retirement and Avoid Overspending During Your Career

Leo Maheras |

You know you want to enjoy your retirement, but getting to that point can feel difficult. Worried that you're not saving enough? Trying to get your spending under control? 

These problems are common for many people who are trying to build their nest egg while balancing their budget, but these tips can steer you in the right direction. 


1. Start Early

The younger you start, the less you have to save, and if you're not scrabbling to save at the end of your career, starting early frees up money in your budget during your working years. That said, regardless of your age, it is never too late to start saving for retirement, and there are tax incentives and special retirement plans designed to help people who need to catch up with their retirement goals. 


2. Set Goals

Set clear goals about what you want your finances to look like during your retirement. If you have a specific goal in mind, saving becomes easier because it's more purposeful. You may not be as motivated if you're just saving blindly. 


3. Put Your Efforts to Work for You

Look for the most effective saving methods. For instance, if your employer matches the first 2% of wages contributed to a 401(k), you should take advantage of that plan. With this type of set-up, you receive a 100% return before the investment even has time to grow. 

In contrast, if you simply put the funds in a savings account, you would merit a negligible interest rate. By choosing the most lucrative investments, you reduce the total amount you need to save and at the same time free up extra money for spending during your working years. 


4. Set Up Auto Savings Routes

 Saving for retirement is almost always easier if the process is automatic. If your employer offers a retirement plan, sign up, and have the funds automatically withdrawn from your paycheck. If you manage your own retirement fund, see if you can have some of your paycheck directly deposited into that account or set up a standing monthly transfer with your bank for the day after you get paid. If you never have the money in your hands, resisting spending will be easier. 


5. Stick to Cash 

If you find yourself coming up short or missing your savings goals, consider putting cash for all your expenses in envelopes. For instance, you may want envelopes for groceries, eating out, clothing, gas, or whichever expenses apply to your life. When the envelopes are depleted, you can't spend any more until the day you have scheduled to refill your envelopes. 


6. Find Affordable Ways to Satisfy the Urge for Instant Gratification

People who enjoy delayed gratification often find saving for retirement easier than people who prefer instant gratification. These psychological underpinnings can enhance or hurt your ability to save, but if you know that you prefer instant gratification, you may want to find affordable ways to meet those urges. 

For instance, pack your lunch but give yourself enough spare cash to splurge on a small dessert or a coffee. Leave money in your grocery budget for unplanned extras. Or find other ways that you can take care of that urge. Then, striking a balance with the delayed gratification of saving may feel easier. 


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal advisor.

LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.

LPL Tracking # 1-05019275