Financial stress can put your retirement plans on hold, but these tips can help you get back on track.
Maybe you believe you are underpaid. Or maybe you don't understand how investments work. Perhaps you aren't financially organized. These are the kinds of things that might put you in debt and lead you to lose momentum on your retirement savings.
According to a 2021 report, a lack of assets and money management issues are significant contributors to high levels of financial anxiety and stress. When people are anxious about money, they sometimes choose to ignore it. However, the longer you wait to start or maintain investing for retirement, the more work you'll have to do later.
Financial stress management techniques
You may have to work longer and risk running out of money in retirement if financial stress is affecting your capacity to save for retirement. In fact, 60 percent of respondents to the Natixis Global Retirement Index for 2021 said they've accepted the possibility of working longer than they anticipated. And 40% believe it will take a miracle to retire comfortably. However, getting started as soon as possible may help you achieve your retirement goals more quickly.
Here's how to manage your fears and get back on track if you're worried about your ability to save for the future.
1. Set a budget that is sustainable
Budgeting can help you save far more money since it will show you where your money is going, allowing you to adjust your priorities. Creating a "bucket budget," which is a limit on how much you can spend in each financial category. Household products, recurrent bills, and amusement are all examples of buckets. Retirement can also be a bucket.
You could also consider downsizing to create extra funds for retirement savings. For example, you may get a cheaper car or share a room to save money on accommodation.
2. Make a list of your retirement funds
Financial gurus recommend that you audit all of your retirement accounts. If you have any old IRAs or 401(k)s, by moving your assets into your current 401(k) or an IRA through a 401(k) rollover, you'll have a clear image of how much money you have and how much you need to save.
Try automating payments if you can save for retirement but are still falling behind.
3. Monitor your progress
Feeling like you're not making progress can add to your financial stress. However, you could keep track of your accounts as you make contributions. S seeing your achievements might make you feel good and remind you that you're investing in your future.
Try to keep your expectations in check and don't expect huge returns in the beginning.
4. If you need help, ask for it
Transparency about your financial status with a financial counselor or financial therapist, friends, or family can help ease financial stress.
Identifying what you don't know and filling in the blanks might help you gain a better knowledge of your financial situation and go forward with confidence.