Few people feel entirely confident they’re saving enough for retirement.
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Why? The numbers can be vague — how long your savings will need to last; your cost of living in retirement; what the stock market will do between now and then. And money is tight, especially as U.S.household debt hits record highs.
These and many other unknowns can combine to make retirement seem a bit like a pipe dream. You can’t resolve all of these issues in a few hours — some, like market volatility, are largely out of your hands — but you can take steps to feel more in control of your goals. Here are three ways to jump-start your retirement savings in one afternoon.
1. Determine your savings target
You kept your calculator from 10th grade algebra, right? It will come in handy — just kidding. Figuring out how much you need to save for retirement sounds much harder than it actually is. It starts with the kind of math you can do on an iPhone: You’re essentially estimating how much you spend today, which gives you an idea of how much you might spend in retirement.
To get started, many people can simply lop off 20% of their current annual income to account for things you won’t have to pay for in retirement, such as payroll taxes, savings contributions and power suits. The remaining 80% is probably pretty close to what you spend on everything else each year. It’s what financial advisors call your “replacement ratio,” and it tells you how much of your preretirement income you’ll need to maintain your lifestyle in retirement.
Then, you need to determine how much you should save to build a nest egg big enough to provide you with that income. To do that, plug your current income, how much of that income you think you’ll need every year in retirement, the amount you’ve already saved and your age into a retirement calculator.
For example, NerdWallet’s retirement calculator will give you a monthly savings target, which is easier to manage than a total savings goal — knowing you need $2 million total for retirement can be daunting; knowing you need to save $1,000 a month gives you a more tangible goal, even if you have to work up to it.
2. Save first and automate your savings
It’s a common disappearing act: You’ve earmarked retirement savings, whether mentally or in an actual spreadsheet, but by the time the end of the month rolls around, there isn’t any money left. This is part of the value of a 401(k): Your contribution is swept into that account directly from your paycheck; there’s no time for it to take a stroll through the shoe store on its way there.
Not everyone has a 401(k), of course, but even if you do, it can be useful to supplement that account with an individual retirement account you fund directly. If you do that, make your monthly contribution as early as possible — immediately after your first paycheck each month, if you can swing it.
When you do that, you’re spending after you’ve saved, rather than saving what’s left after you’ve spent. And here’s a little-known fact: Many companies will allow you to split up your direct deposit, electing to have a portion sent to an IRA and a portion to your bank account, which essentially mimics the ease of a 401(k) contribution.
3. Consolidate and reduce fees
The benefits of a 401(k) dwindle a bit once you leave the job that offers it: For one thing, you can no longer contribute to the account.
There still may be perks — 401(k)s have a reputation for being expensive, but the investments offered by some larger plans may actually be less expensive than what you’ll find on your own — but depending on your career stage and how many times you’ve switched jobs, these accounts can pile up. If you’ve accumulated a 401(k) graveyard, it’s time to evaluate your options.
Administratively, it can make sense to roll these old accounts into an IRA, especially a low-fee account you manage yourself. You’ll cut out any fees you were paying to your old employer’s plan, and you can select low-cost investments like index funds and exchange-traded funds.
Rolling over is a simple process — this 401(k) rollover guide can help you. Your IRA provider will be glad to lend a hand in exchange for your business, and you can initiate a direct rollover so the money goes from plan to plan without touching your hands. If you don’t already have one, you can open an IRA with a few clicks online.
Arielle O’Shea is a staff writer at NerdWallet, a personal finance website. Email: firstname.lastname@example.org. Twitter: @arioshea.
This article was written by NerdWallet and was originally published by Forbes.