5 Sacrifices to Maximize Your Retirement Account Contributions Next Year

How To Save For Retirement | Bankrate

Are you ready to invest more in your retirement each month but unsure how to make it happen? Increasing your savings rate might seem daunting when the numbers don’t add up, but remember that saving something is better than nothing. If you can’t max out your retirement account right away, that’s okay. You can work your way up to this goal over time. Here are five sacrifices that can help you max out your retirement account.

1. YOUR CAR

One significant sacrifice to consider is your car. While you can save a lot by not owning a car, especially if you live in a big city, you don’t have to give up driving entirely. My husband and I drive older, paid-off cars, which saves us a lot of money. With the average car payment around $400 to $500 per month, that’s a significant amount you could redirect to your retirement savings. $500 per month is enough to max out an IRA since the annual contribution limit is $6,000 for those under 50. Instead of buying a new car, opt for a reliable used car that you can pay off quickly or even buy with cash. The money saved on car payments can then go toward your retirement.

2. LIVE IN A SMALLER HOME

We are currently living in a smaller home and sacrificing our dream house, and that’s okay. We bought our first home a few years ago, and it’s a nice starter home that’s small but sufficient for our current needs. By choosing a smaller home, we save a lot on our mortgage, maintenance, repairs, and cleaning costs. While I’d love to have more space and amenities, I focus on the benefits of our current home, like the extra bathroom and nice fireplace. Sacrificing a larger home now allows us to save more for retirement, and we can always upgrade later when it’s more financially feasible.

3. FRUGAL TRAVEL

Some people give up traveling to save money, but you don’t have to. Instead, find ways to make travel more affordable while still contributing generously to your retirement. Embrace frugality by being creative with your travel expenses. Use rewards credit cards, look for flight sales, stay with friends or family, or book budget-friendly accommodations like Airbnb. When I travel, I often prepare some meals myself to save on dining costs. You don’t have to sacrifice travel completely; just find ways to do it more economically.

4. DELAY YOUR GRATIFICATION

In today’s fast-paced world, it’s easy to fall into the trap of instant gratification, often leading to debt and overspending. Practice delayed gratification by budgeting for larger purchases instead of financing them. My husband and I had a lot of debt in the past, but we’ve learned to wait and save for things we want. Avoid impulse buys and financing purchases, and you’ll find your budget isn’t as tight. This approach can free up thousands of dollars each year that can go toward your retirement.

5. YOUR TIME

Time is a valuable asset, and how you use it can significantly impact your ability to save for retirement. Consider getting a second job or side hustle to increase your income. Even establishing a passive income stream requires an initial time investment. Sacrificing your time to earn more money is worthwhile if it helps you reach your retirement goals. Choose work that you enjoy and find fulfilling to make the most of your efforts. Stick to your budget, save diligently, and remain committed to your goal of maxing out your retirement contributions.

By making these sacrifices, you can create room in your budget to maximize your retirement account contributions without drastically changing your lifestyle. With dedication and a strategic approach, you can ensure a comfortable and secure retirement.

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