Saving is hard – especially these days.
You may have immediate concerns like student loans, credit card bills, mortgages, or childcare payments. Or maybe your current job is “just for now,” and you don’t want to commit to a retirement plan yet. Perhaps you’re new to investing, or you’re nervous about taking on risk.
We understand, but consider this: Time is your biggest ally when it comes to the growth of your retirement account. Even small amounts can become substantial savings if you start now. Here are some simple ways to save a few dollars every day – and an idea of how that money can grow over the years.
- Skip the coffeehouse. If you kicked your premium coffee habit and put $3.50 into your retirement account every day instead, you could boost your savings by $105,000* after 30 years.
- Dodge the drycleaners. Saving the daily cost of a $4 dry-cleaned shirt can mean more than $120,000* after 30 years. In 40 years, you could have almost a quarter of a million* dollars.
- Pack your lunch. If every day you saved the cost of a $7 take-out lunch, you could have nearly $420,000* after 40 years. Bringing lunch just 2-3 times a week can make a big difference.
- Cut the cable. The cost of cable has increased dramatically in the past 10 years, and rates are projected to continue rising. If you’re willing to part with your 200 channels, saving that extra $90 a month can mean almost $130,000* in 35 years. Many providers also offer basic plans at a big discount.
- Simplify your cell phone. These days, many of us live on our smart phones. But when you consider data and texting, most plans cost at least $70 per month. Saving that amount could grow into almost $100,000* after 35 years. You probably can’t live without your cell phone, but simply scaling down your usage can make a difference.
Not ready to lose the lattes or dial back your cell phone? Remember that even minor changes can add up. For example, saving the daily cost of a $1 mobile app or a $1.50 bottle of water can mean tens of thousands of dollars* over time. The important part is to start early and be consistent.
* All figures assume a 6% annual rate of return compounded monthly.
Make Changes in 5 Minutes
Think you’ve found a way to save some extra money? You can increase your contributions by signing into your agency’s electronic payroll system and selecting the “Thrift Savings Plan” option. If your agency doesn’t have an electronic system, you can also complete Form TSP-1 and send it to your agency’s payroll or benefits office.
To learn more about saving early for retirement, visit tsp.gov/takeFIVE or watch the video below:
Next Week: Connecting with Your Future Self
Similar to private sector 401(k) plans, the TSP is a defined-contribution plan that provides Federal employees the opportunity to save for additional retirement security. If you have a question or comment about this post, please contact us directly. We are unable to respond to any messages on this site.