At what point should a couple nearing retirement worry they haven’t saved enough to stop working? This is one question I asked myself recently after reading that the median savings among households nearing retirement is just $14,500, according to the National Institute on Retirement Security.
As my Grampy used to say back in the early 1960s when he handed me a $1 bill to spend as I pleased. “Now don’t go spend it all in one store.”
Let’s put it this way. I’m happy I’ve got more than $14,500 as I get closer to my retirement, and here’s the kicker. In addition to two employer-funded retirement accounts and social security, I’ve also saved almost $40,000 to use in retirement in one cash reserve, all saved in $5 bills! In around 12 years. Painlessly.
So, what’s one thing you can do to begin saving money fast, regardless of your age or how many years you have until retirement? Start saving every $5 bill you get back as change in a cash transaction. The best thing about saving $5 bills is that you can begin this practice at any stage in life. Of course the earlier you commit to it, the bigger your nest egg when you do retire.
Save $2000 a year in $5s (approximately $5/day) starting at age 50 and you’ll have $30,000 by the time you turn 65. Save $4000 a year (approximately $11 a day, or put another way, around two $5s a day) starting at age 35 and you’ll have $120,000 by the time you’re 65. Begin the practice when you’re 21 years of age and save just $3600 a year in $5s (approximately two $5s a day) and you’ll have a whopping $158,400, just in $5s, by the time you turn 65.
Stop worrying about saving for retirement now. Commit to one small practice like saving every $5 bill received as change in a cash transaction and watch your overall nest egg—and your sense of abundance—grow.
Yours in Fives,