Retirement-preparation mode means figuring out sustainable ways to secure the upcoming decades of retirement. Developing good habits now can help you cement behaviors that will make saving for consistent.
Recent research found that it takes about 66 days to change a habit, which isn’t long if you consider that these changes could benefit you for decades to come. If you’re between ages 52 and 70, here are five things you can do now to build sufficient retirement savings for later.
Downsize your home
If you raised a family, a big house and spacious yard were perfect for those backyard soccer and football games. Now, with the kids grown and out of the house, chances are you’re paying for space that you probably aren’t using.
For most people, a home is the biggest expense. Add mortgage payments, utilities, property taxes and maintenance, and you’re shelling out a lot of cash. Even if the mortgage is paid off, the property taxes, repairs and maintenance never go away.
One of the best saving tips is to downsize by moving to a smaller home, condo or possibly a rental apartment. But just downsizing isn’t enough. The true saver won’t benefit if she doesn’t do something smart with her savings.
You need to be deliberate and take the actual amount you’re saving, and put that money aside—in an individual retirement account, Roth IRA, 401(k) or savings account—and designate it for retirement. If not, you’re likely to spend the savings, which won’t help your retirement at all.
Ditch the luxury car
The second-biggest money drain for most people is a vehicle, according to the Bureau of Labor Statistics. Your vehicle drains an average of $8,558 each year from your budget, according to a recent AAA survey. In a year, you’ll shell out for car payments, insurance, gas, repairs and maintenance.
If you’re driving to impress with a lean retirement pocketbook, you might want to consider selling your vehicle for a low-cost-to-own model. Luxury cars are much more expensive to own than their non-luxury counterparts, according to vehicle valuation guide Kelly Blue Book.
The lowest cost-to-own luxury model was the Volvo S80 T5, at $52,104 for five years. In comparison, the 2016 Honda Accord LX was the lowest cost-to-own standard model, costing $31,587 over five years. That’s more than a $20,000 difference between a standard and a luxury model.
If you trade down to a standard-model vehicle, keep it a long time and you could save an average of $4,000 per year. That could help a 52-year-old amass an extra $80,000 by age 72. If you invest that $4,000 every year in a balanced index fund that earns 7 percent annually, the savings would be worth $184,296 after 20 years.
Push the kids out of the nest
We all love our kids, but if it’s a choice between living with them in old age or living on our own, consider which one you prefer. Most adult children would prefer that their parents live on their own in retirement.
Yet if you keep supporting your kids as they grow into adulthood, you’re potentially hurting them and yourself. You deprive yourself of the future retirement savings that could be going into your own account. Additionally, you’re possibly setting your kids up for more dependence and a potential future filled with care of mom and dad.
If you’re going to help the kids at all, budget a set amount that won’t sink your retirement plan—and stick with it, suggested financial counselor Lacey Langford. Remember the compounding example from savings tip No. 2. If you stop subsidizing the kids and take those dollars and invest them for your own future now, you’re likely to yield a much sweeter retirement.
Eliminate all debt
For those who have credit card balances, commit to paying at least 10 percent of your income toward your debt, suggested Ilene Davis, a certified financial planner. In fact, auto-pay the debt so that you won’t have to make a decision every month about whether or not to pay.
It’s likely that with auto-pay, after a month or two, you won’t even miss the money coming out of your checking account. Creating a system of positive choices—including habits like this—can help you improve your wealth and your life, according to economist Richard Thaler and co-author Cass Sunstein, in their top-selling book “Nudge.”
It’s no surprise that you’ll feel better if you’re healthier. But if you’re serious about saving for retirement, there’s proof that getting healthy can help.
If you live a healthy lifestyle, you’re more likely to save money on a litany of costs, according to the Centers for Disease Control and Prevention. Medical costs will decline, you’ll save money on expensive vices such as smoking and drinking, you’ll spend less money on prescription drugs and over-the-counter fixes, and your food budget will drop. Start small with an app that has healthy eating tips, motivation and mini-workouts to keep you on track.