If you’re one of those fearing about the size of your savings pot then you’re not alone. There’s a galaxy of data evidence out there to show that millions of us are racked by concerns that we haven’t been stashing away enough for retirement.
In recent years, times have been tough for many of us because of meek earnings growth and a gradual increase in the cost of living. But don’t panic! With a few tweaks, it’s possible to give your retirement fund a serious shot in the arm.
1: Jump-start your income
There’s a number of ways to theoretically do this, from getting your head down and really working hard to secure that promotion, to taking the cataclysmic step of jacking your day job in entirely and getting something more fiscally rewarding.
An increasingly-popular way that many people are boosting their incomings is by securing a second job. It’s estimated that some 44m Americans are engaged in a supplementary form of employment and the practice is becoming an increasingly-popular one in the UK, too.
2: Draw up a budget
“A penny saved is a penny earned” may be an obvious trope, but it’s something I live my life by. Increasing your income and cutting your outgoings are two sides of the same coin. So drawing up an expenditure plan can help you generate some significant cash for your pension pot.
Budgeting is very much a state of mind. If done correctly, it doesn’t necessarily require drastic changes to your lifestyle, like downsizing your home or selling the car. It’s often about setting a maximum for how much you are willing to spend and to find creative ways to achieve this.
And there’s never been a better time to do this. There’s an abundance of resources out there to help you cut your expenditure quickly and easily. The likes of uSwitch can help you bring down the costs of many everyday items like gas and electricity, car insurance and credit cards. And mySupermarket compares prices across some of the country’s biggest retailers to slash your grocery bills.
3: Avoid low-yielding investments
Steps like sticking to a budget and boosting your income are great ways to hive off extra cash for your savings pot.
But this is only half the battle. If you want to maximise the fruits of all of your hard work, it’s important to avoid investments which offer paltry returns, like cash ISAs. In fact, picking a low-yield product is particularly dangerous, with the post-financial crisis period of flatlining inflation now at an end.
The best-paying cash ISA, for example, still pays less that 1.6%, some 50 basis points below the current level of CPI in the UK right now. This means that the value of your cash is actually eroding. And there’s no sign that the interest rates available to savers are likely to spike any time soon, meaning that you’re going to need to seek out other ways to build a big retirement fund.