How to Save for Retirement on Less Income

Get 6 tips to save for retirement and have a happy future—even on less income.

Laura Adams, MBA
4-minute read

How to Save for Retirement on Less Income


Andrea J. asks:

How can I possibly save for retirement when I can’t keep up with my bills? I’m over 50 years old and barely have any money set aside. I’m surviving on a low income and am scared that I’ll never have enough for the future. What advice can you give me?

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Unfortunately, Andrea’s situation is common. Almost half of Americans aren’t saving anything for retirement. Whether you’re struggling because you have low income or high expenses, it’s time to start thinking strategically about how to save for retirement.

Here are 6 ways to ensure that you’ll have a secure financial future:

Tip #1: Earn More

Getting a second job, doing freelance work, or creating a home business can be the key to having enough to cover your current obligations and save for retirement.

Speak to your boss about the possibility of getting a promotion. Consider doing seasonal work. Get training for a more lucrative career. Talk to people who are earning more or who have jobs that you want and find out what’s involved.

Additionally, your future Social Security retirement income is based on your top career earnings. So, beefing up your total annual income now means you’ll also get more retirement benefits in the future.

Related Content: Tips to Make Extra Money at Home

Tip #2: Cut Expenses Ruthlessly

The majority of Americans say they don’t keep a budget or really know where their money goes. You can’t improve what you don’t measure, so it’s very important to track your expenses carefully.

You can monitor your budget the old-fashioned way by writing your income and expenses in a journal. Many people use budget planning spreadsheets or computer software. There are even free financial apps that help you create and monitor a budget on the go.

Once you see how you spend money, find ways to severely cut back (whether it’s bringing lunch from home, or buying fewer clothes and shoes). Those savings can grow into a healthy retirement account.

Related Content: 5 Clever Ways to Save More Money

Tip #3: Eliminate Expensive Debt

Having high-interest debt is expensive and leaves you less to put away for retirement. Start by making a list of your debts, including the outstanding balances and interest rates.

Pay off your highest interest debts first—such as payday loans or credit cards—so you can save the most. You can use the savings to pay off your debt faster or put the money in a retirement account.

Remember that you should always pay as much as possible on credit card balances each month. If you’re just making the minimum payments, you’re making the card company rich instead of building wealth for yourself.

Related Content: Pay Lower Interest Rates on Debt

Tip #4: Use Tax-Advantaged Retirement Accounts

If you’re lucky enough to have an employer that offers a retirement plan and matches contributions, don’t take it for granted. Always contribute enough to max out the match—otherwise you’re leaving free money on the table.

Contributions to workplace plans—like a 401(k) or 403(b)—are tax deductible, which means they reduce the amount of tax you owe. If you don’t have a job with a retirement plan or you’re self-employed, you can get excellent tax benefits with a traditional IRAor Roth IRA.

Related Content: Your Guide to the Roth IRA, Part 1

Tip #5: Make Saving Automatic

Even if you can only set aside a few dollars a month, put your retirement savings on auto-pilot. When money is automatically transferred from your paycheck or checking account into a retirement account before you can spend it, odds are you’ll be more successful.

You can always reduce or increase the savings amount later. But go ahead and get your accounts set up now and put a retirement savings plan into motion.

Related Content: Financial Advice That Will Make You Rich

Tip #6: Consider an Alternative Retirement

If you can’t save any money for retirement, you’ll be forced to work longer or to live on Social Security benefits.

However, if you’re willing to retire outside of the U.S., there are many places where you can live a comfortable or even luxurious lifestyle on a smaller income. Over half a million retirees are enjoying an alternative retirement overseas, where you can still receive Social Security payments. Yes, this is a bit outside the box, but it might be a good option to consider.

Related Content: How to Retire Early and in Style—Without a Fortune!

Accumulating enough for a safe and happy retirement can be challenging. Start thinking about your financial needs sooner rather than later—and reach out for professional help when you need it.

Other Articles and Resources You Might Like:
5 Tips to Simplify Your Personal Finances
Checking Accounts That Allow You to Bank the Benefits
25+ Best Personal Finance and Productivity Tools
Money Girl’s Smart Moves to Grow Rich – get the paperback or ebook!

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About the Author

Laura Adams, MBA

Laura Adams received an MBA from the University of Florida. She's an award-winning personal finance author, speaker, and consumer advocate who is a frequent, trusted source for the national media. Money-Smart Solopreneur: A Personal Finance System for Freelancers, Entrepreneurs, and Side-Hustlers is her newest title. Laura's previous book, Debt-Free Blueprint: How to Get Out of Debt and Build a Financial Life You Love, was an Amazon #1 New Release. Do you have a money question? Call the Money Girl listener line at 302-364-0308. Your question could be featured on the show.