Be honest: How often do you really think about your retirement savings? Or maybe the better question is: How often do you actually do something to grow that nest egg?
If recent research is any indication, the answer is probably “not too often.” In fact, it seems like every other month a new study makes headlines that reveals how much Americans aren’t saving for retirement—and how stressed we are about it.
According to the Employee Benefit Research Institute’s 2014 Retirement Confidence survey, 52% of workers have less than $10,000 saved for retirement—and 36% have less than $1,000. Meanwhile, only 18% of those polled are “very confident” that they’ll have enough saved for their golden years.
So why do we have such a hard time stashing away even modest amounts?
Part of the obstacle may be psychological: It’s hard to keep something that's still decades off top of mind. “One of the biggest barriers to saving for retirement is just the idea of getting started, because it seems too big and overwhelming—or just too far away,” asserts clinical psychologist Andrea Bonior.
It’s easy to understand why the $25,000 car you’re saving up to buy by year’s end can feel more tangible than the fuzzy picture you've painted for your sixtysomething self. But saving for retirement is one of the cornerstones of basic financial security—and, priority-wise, should trump that new set of wheels.
So what if you could retrain your brain when it comes to how you think about retirement? From ditching the "R" word to treating yourself to retirement "gifts," here are clever ways to rewire your noggin to start building up that nest egg better—and maybe even have a little fun in the process. Yes, we said fun.
1. Rethink the “R” Word
When you hear the term “retirement,” does it conjure up some decades-off dollar figure or do you actually think of it as an important milestone in life—like, say, your wedding day, your first home or having your first child?
Chances are, it’s likely to be the former.
To troubleshoot this line of thinking, "instead of ‘retirement planning,’ adopt the term ‘lifetime planning,’ ” suggests Jan Cullinane, author of "The Single Woman’s Guide to Retirement." “This turns it into something to think about now, rather than 30 years down the road.” Case in point: Consider viewing your ideal retirement as really your second career life stage or your world traveler life stage—as opposed to merely the dollar amount you'll need to get there.
2. Visualize Yourself in Your Dream Retirement Locale
Part of what contributes to the stress of saving for retirement is not knowing what your future cost of living will be. Will you keep an expensive pied-à-terre in New York City or a beachfront condo in Miami? Or would you prefer to stay put in the home where you raised your family?
Rather than try to prepare yourself for every conceivable option, do some research to figure out how much it costs to live in a place that exemplifies where you could see yourself. “Too many choices are paralyzing,” Cullinane says. “When it comes to where to live when you retire, narrow the choices down to three or four good ones, based on your 'non-negotiables.' Then investigate just those few possibilities instead of every one."
Just keep in mind that where you live now will likely influence how much—or little—you’ll need to save. For example, “When you live in California, the cost of living generally means that you need to save more,” says Kimberly Foss, a Certified Financial Planner™ and the founder of Empyrion Wealth Management. “This differs quite a lot from someone in, say, Tennessee, who may have a much lower overhead.”
In fact, people who live in the West plan to stash away more for retirement than residents in other regions of the country, according to a recent survey by Merrill Edge. Overall, West Coasters anticipate saving more than $1 million for retirement—that's a significant amount more than those based in the South, who plan to save closer to $780,000.
Of course, money is just part of the equation. Do you need to be surrounded by nature, or do you prefer the thriving pace of a city? Is not having enough golf courses per square mile going to hurt your game? Factors like the weather, local activities and accessible health care are also going to be important to you. So check out resources like this Milken Institute report, which ranks the best cities for aging, to figure out where you could see yourself growing old.
3. Give Yourself Retirement “Gifts”
Since the ultimate amount you think you’ll need to save for retirement may be intimidating—if not downright daunting—think about setting up smaller, more relatable goals for yourself along the way. A good way to do this? Consider tying your retirement savings to a holiday or birthday, which will give you annual guideposts to work toward—and associate saving for your golden years with something positive.
RELATED: What's Your (Retirement) Number?
For instance, “make a goal that, by New Year’s Eve, you’ll have X number of dollars in your account,” Bonior suggests. “Then bump that [goal] number up for the following year.” Or include a specific retirement savings amount as part of a birthday gift to yourself, Bonior adds. So maybe in addition to the high-definition TV you plan to splurge on, you also commit to contributing another $500 to your IRA.
If you haven’t yet opened a retirement account, the key is to simply get the ball rolling—even if it's just a small amount—or get in the habit of adding more to your principal whenever you can. “The earlier you start saving, regardless of the amount, the better you’ll make out because time and compounding are your friend,” says Bill Losey, a Certified Financial Planner™ and the author of "Retire in a Weekend." “It’s a lot easier to save $100 to $200 a month when you’re 20, then waiting until you’re 50 ... and having to save $50,000 a year.”
4. Take the Path of Least Resistance
Overwhelmed by the thought of having to follow through on yet one more financial to-do each month? “Set up defaults to help you save for retirement, [so that you] don’t have to make repeated conscious choices,” Cullinane says.
The most obvious way to do this, of course, is to participate in your company’s 401(k) plan, so you can have that contribution come directly from your pay before taxes. Or you can set up an automatic transfer that apportions a part of your paycheck to your personal IRA. “If all of your paycheck goes to your checking account, there’s a much smaller chance any of it will ever make it into savings,” Cullinane says.
Even automating 1% makes a difference—not only in actual dollar figures, but also because it bakes saving into your routine. “[Some people think], ‘I can’t save 10% to 15%, so why bother?’ ” Losey says. “But what about saving 1% of your salary? If you can, do it. It’s not so much the amount—it’s about getting into the habit of saving.”
5. Set Rules for Your Contribution Increases—and Stick to Them
It can be easy to forget about upping your retirement contributions as time goes by, unless something like getting a new job requires you to redo your paperwork. But in the same way that you'd schedule an annual health checkup, you should schedule an appointment with yourself to up your retirement contribution. In fact, we prefer to do this in July ourselves.
You can also consider tying your increases to a salary raise. If your pay goes up by 5%, then boost your contributions by 5%. Or if you don’t think you can devote the entire increase to retirement, then choose a percentage of that raise to allocate to your retirement account. “Say you get a 3% raise," Losey says. "Save 1% of that, and spend the other 2%." This way, you’re consistently saving more, while still enjoying the fruits of your hard work.