Markets

How To Boost Your Retirement Savings By $50,000

What if there were an easy way to increase your nest egg by $50,000, one that wasn't painful, labor intensive, or complicated?

Well, it turns out there is. All you have to do is increase your 401(k) contribution by $100 a month and add some time...20 years, to be exact.

No, seriously. If you save an extra $100 a month with 7% average annual growth, at the end of 20 years you'll be sitting on over $50,000 more than you would have otherwise.

It's an example of the incredible outsize impact of a regular savings habit combined with time and compounding.

This is why you should save more

Think about what you could do with an extra $50,000.

Assuming you stay at a 7% growth rate, you could take nearly $400 per month for 20 years to fund martinis at the country club or gifts for your grandkids. You could finance a few immense trips to Europe. Or you could hang onto it and have nearly $100,000 at the end of another 10 years.

And it'll only cost you an extra $100 a month.

Don't underestimate the power of small changes

Don't have $100? Try $50, or even $25.

The point is that a relatively small increase in your savings habit can pay enormous dividends over time. It doesn't have to be painful or require a major lifestyle overhaul -- it can be as modest as trimming your bacon habit (not that I know about that, cough cough) or cutting down on trips to the soda machine.

In other words, if you can give yourself just a little bit less discretionary income and put that money toward your 401(k) instead, you'll be giving yourself an enormous boost over time. Even your $25 a month will turn into $13,000 over 20 years -- it might not sound like much, but that's a significant pot of money for the equivalent of a couple lunches a month.

Where can the money come from?

You can often find money in unexpected places -- like that bacon bill. Don't get me wrong, I love bacon, but even for a bacon lover a package a day was an excessive (not to mention expensive) habit. Cutting bacon by half got me an extra $50 a month.

I'm not saying you should stop wholesale the things that you love. Far from it! It's just that we all could probably find a fair amount of chaff in our spending habits as opposed to the wheat -- those expenditures that don't really add value to our lives.

It might be soda (or an extra martini at happy hour), or it might be bacon. Maybe it's the premium cable TV package or something else entirely. Whatever those extra expenditures, take the time to investigate them and see if you wouldn't rather have those martinis in the future, or that month-long trip to Italy.

The $60K Social Security bonus most retirees completely overlook

If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could ensure a boost in your retirement income of as much as $60,000. In fact, one MarketWatch reporter argues that if more Americans used them, the government would have to shell out an extra $10 billion... every year! And once you learn how to take advantage of these loopholes, you could retire confidently with the peace of mind we're all after. Simply click here to receive your free copy of our new report that details how you can take advantage of these strategies.

The article How To Boost Your Retirement Savings By $50,000 originally appeared on Fool.com.

Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

Copyright © 1995 - 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Other Topics

Stocks

Latest Markets Videos

The Motley Fool

Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

Learn More