How to Start Building a Nest Egg

Skipping meals. Doing without important medications. Struggling to pay for a place to live. Those are the kinds of things you’ll face as someone who retires without a nest egg. And in many cases, retirement is involuntary. Even greeters get laid off.

So if you think you can’t afford to start building a nest egg now, think again.

If you’re young

If you’re in your twenties or thirties now, you’re in an awesome position. In that case, building a nest egg can START by setting aside at least a very small portion of every paycheck for retirement — and then gradually increasing that percentage on a regular basis — every time you get a raise (and more often, if you can).

If you really and truly don’t believe you can set aside even 1% of every check for retirement right now, I challenge you to do it anyway — especially if your employer offers a 401k plan.

Let’s say you make $32,000 a year and are single. In that case, 1% would be $320. If you get paid every week, that’s $6.15 less a check. (Except it will actually be more like $5.23 less a check, because of how the 401k affects your taxable income.) Is there ANY way you could cut about $5 a week out of your current spending? Or is there ANY way you can bring in an extra $5 a week? That’s not a whole lot of “having no life” to take in exchange for a little bit of a retirement cushion.

It’ll also add up faster than you think. Even if you NEVER make more than $32K a year (which is unlikely), never have an employer match, and only manage to get a 6% rate of return, you’ll end up with over $50,000 in 40 years. Assume a still-conservative salary increase of 3% a year and a 25% employer match of up to 3% of your salary, and you end up with a nest egg that’s more than $96K.

If you’ve got less than 40 years until retirement

Don’t despair. Even if you have NO money saved right now, every single dollar you can put away will still help. So start today. Right now. Quit reading this article and open an IRA.

Put whatever you were going to spend for lunch, dinner, clothes, or entertainment in it right now. Even if that’s a dollar. You can improve your future.