You Won’t Reach Retirement Without Saving for It

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Many of us view our retirement years with expectant joy. We dream of having no bosses or clients to deal with and the idea of finally being able to do what we want in life. You might even speak with someone close to retirement and see their appetite whet as they envision what they will soon be doing. Vacations, volunteer work and relaxation are common retirement goals. Conversations with satisfied retirees reveal one stunning similarity – this period of R&R was reached through hard work and difficult choices. Hmmm…sounds like the frugal life, doesn’t it?

Our retirement years are dictated by the choices and actions we make now. Budgets are made and bills look overwhelming, yet we still need to include a line item for retirement. Unfortunately many of us are guilty of thinking we don’t have the funds to save and leave retirement savings in the rearview mirror.

A recent LIMRA survey found that 49% of Americans are saving nothing for retirement. While this is a startling statistic, it points out the seriousness of the situation. The situation is dire, yet it is not beyond repair. A few simple choices, the hallmark of living frugally, can get us on the road to saving for retirement.

Invest Frugally


Investing can seem daunting to many, especially if you lack the time or experience to do it yourself. Yet, if you are comfortable managing a self-directed IRA you can do so frugally as opposed to hiring someone to manage the funds for you.

Even if you consider yourself a novice to investing, many of the larger online brokerages offer a wealth of free information about basic investment strategy. You can also take advantage of the fallout from competition in the online brokerage space as it has resulted in lower costs for many services, such as:

  • No cost trading on a select group of ETF’s
  • No-Load, low expense index mutual funds
  • Free trades, or even cash promotions for opening a new account
  • Brokerages, such as Betterment, that require very little to open an account

If you act wisely, then you can significantly lower your costs associated with retirement investing which will result in having more of your hard-earned funds working for you.

Free Money for Retirement…Yes, Please


A given for living frugally is being on the lookout for good deals, or even better, free money. The latter is hard to come by, so  when you see it, grab it. The first place to look is your company-sponsored 401k. Many employers today will offer to match 50% of the first 6% that you save, capping it at 3% of your total income. This awesome benefit offers two tangible rewards:

  • Free money
  • Lowering your taxable burden

What could be better than receiving free money towards retirement and lowering your taxable liability? Additionally this free money is put to use towards your retirement savings which is our end goal. If you’re not comfortable making your own investment choices, many plans will offer Target Dated funds which can take the legwork of investing off of your plate and will allocate itself based off your age and will reallocate itself appropriately.

Why wait?


The simple answer is to stop waiting. If you can’t put away much for retirement in the beginning don’t allow that to keep you from saving altogether. Set a small goal that you can fit in to your budget and start with that. The act of saving for retirement, even in small amounts, will help you in the long run.

What steps are you taking to save for retirement? What goals do you have for retirement?


Photo courtesy of: Ned Horton

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John is the founder of Frugal Rules, a dad, husband and veteran of the financial services industry whose writing has been featured in Forbes, CNBC, Yahoo Finance and more.

Passionate about helping people learn from his mistakes, John shares financial tools and tips to help you enjoy the freedom that comes from living frugally. One of his favorite tools is Personal Capital , which he used to plan for retirement and keep track of his finances in less than 15 minutes each month.

Another one of John's passions is helping people save $80 per month by axing their expensive cable subscriptions and replacing them with more affordable ones, like Hulu with Live TV.

Latest posts by John Schmoll (see all)


  • Glen @ Monster Piggy Bank says:

    49% of people with no retirement savings!!! How can that even be possible, don’t people realise that the pension/social security is barely enough to live on and they are doing themselves a massive disservice?

    I’m so glad I had financially aware parents who taught me what I know about money.

    • John says:

      I know Glen. I had the same thought. Working in the industry though, I can tell you that the number is not that far off. I think many people just put it off or come up with an excuse of why they can’t save. Those banking solely on social security are going to be in for a rude awakening.

  • Greg@ClubThrifty says:

    Free money for retirement??? Yes please!!!

    That is so true. You absolutely must take advantage of the free money that is offered to you. It is free! The only thing you have to do is show up for work and put a little money away yourself for the match. It is a no brainer.

    Nice post at Iheartbudgets too:)

    • John says:

      I completely agree Greg. Showing up is 90% of it. If I am being offered free money, and it’s ethical, then I will do all I can to get it. Thanks!

  • DC @ Young Adult Money says:

    It’s always better to start saving SOMETHING rather than nothing. Even if it’s a small amount. Some people are lucky, as you referenced, and have a certain amount matched for their 401k contributions. You are losing money if you don’t at least put in the amount the employer will match!

  • Mandy @MoneyMasterMom says:

    I can’t imagine not taking advantage of free money. I’d be paying myself first for sure!!!!!! It’s hard to believe that half of Americans are saving nothing for retirement, I can’t imagine living without a financial cushion.

  • Jason @ WorkSaveLive says:

    We have some fairly large goals for retirement, but until my income/life stabilizes a little, I’m not sure I can put together a decent retirement plan. We are currently saving in a 401k and Roth 401k and I hope to start some Roth IRAs next year! Before we tackle that however we’ll be focusing on eliminating some of our student loans!

    • John says:

      I can relate Jason. Running our own business makes it difficult to focus a lot of retirement investing. We do a lot at year end as opposed to month to month, but at least we’re saving.

  • Veronica Hill says:

    Wouldn’t it be wise to invest aggressively at a younger age? I can understand investing frugally if you’re behind, but for those starting off young it seems to make more sense to try something early to see how it works for them. If it fails, at least they fail early and if it doesn’t, there might be better rewards from increased risks.

    • John says:

      It would Veronica. Although, that really was not the point of the post. It was more so of the idea that you have to start saving for retirement if you plan on getting there.

      The investing frugally was the point that there are many ways you can keep your costs down when associated with investing that many don’t think about, not being frugal when you invest.

  • Jennifer Lynn @ Broke-Ass Mommy says:

    That is a pretty bleak statistic indeed, and I weep for the elderly solely relying on their social security. Isn’t there a saying that your Golden Years should be some of the best times of your life, to relax and enjoy grandkids and travel, etc? I can not even imagine the standard of living awaiting those half of Americans who have not yet considered socking money away, to fund a comfortable and enjoyable retirement.

    • John says:

      I completely agree. I think it’s especially true for those counting on Social Security as being there for them. The painful fact is that is probably won’t be. This all leads to people working til later in life. If you want to do that great, but is sad when they have to.

  • Cat says:

    I have RRSPs (Canada- not 401K), plus a stock savings plan where my employer matches some of what I put in (also in RRSPs). I can’t imagine not saving for my retirement – I have no interest in just barely scraping by!

    • John says:

      I am the same way. I can’t imagine barely making it in retirement. I’d much rather be skimping now so I can put money away for the future so I don’t have to then.

  • Kim@Eyesonthedollar says:

    You can just look at my inlaws to see how “fun” retirement is living on social security alone. They have a tiny rental house in a bad part of town, no assets, and a 12 year old car. They have enough for basic necessities, but that’s about it. It inspires me to put as much away as I can, althought I don’t wish that learning experience on anyone.

  • John says:

    That’s a good, but sad point. I’ve talked to too many people thsat are in very similar situations and it drives me to save as much as we can so we won’t be in the same situation.

  • Edward Antrobus says:

    I have my small IRA that I’m currently socking some money away in. Personally, I hope I never have to use it. I remember how frustrated my grandfather was when he doctor finally made him retire a year befor he died.

  • K.K. @ Living Debt Free Rocks! says:

    I also can’t comprehend why someone wouldn’t take advantage of an employer who offers a match at any percentage. That is free money people are leaving on the table. (in Canada the employer contribution is a taxable amount I believe but eligible as a deducion) With my last employer I have RRSP’s from a group plan that I need to rollover into a personal RRSP. Due to my impending immigration to the U.S. my debate right now is whether to leave the money in the RRSP until I retire, declare the funds to the IRS when I’m first eligible to file income taxes order to benefit from the U.S./Canada tax treaty 15% withdrawal rate but I will no longer be able to contribute any money into the RRSP. My other option is to withdraw my funds when I obtain my PR and pay a 25% withdrawal tax once I give up Canadian residency…I think I need to talk to a cross-border tax professional…

  • MakintheBacon$ says:

    My retirement plan is pretty common and pretty basic, just to work as much as I can, while I’m relatively young and healthy. With that money, try and save as much as I can, invest as much as I can. I have some money stashed away in RRSPs, am making monthly contributions to low to medium risk mutual funds that tap into Canadian and US markets and have a small chunk of money invested in stocks (Canadian and US companies).

    I feel that the years are already flying by and retirement will come up a lot faster than I think. 😉

  • My Money Design says:

    Nice work resurrecting this gem. You know how I feel about saving for retirement, and I think every little bit helps!

  • Stan @DebtsnTaxes says:

    I was one of “those” guys that didn’t save for retirement when I first started working. For the first two years of my employment I didn’t contribute because I figured that money would be better used to pay down debt. That was stupid. My employer automatically contributes 4% and will match up to another 3%. I was dumb and didn’t put in the 3% even though I would get a 100% return on that money. I have since fixed that mistake and was contributing 3% since. I upped that this past month by 1% and plan on increasing it yearly. I also started funding my Roth IRA which we probably won’t be able to max out for a while but every little bit adds up. Like you said, if we want to retire we are going to have to save for it.

    • John says:

      We all make mistakes, I did something very similar my first few years out of school. The key is learning from those mistakes an implementing what you learn. Great start on getting the match and starting a Roth!

  • AverageJoe says:

    You know, since I sold my business my personal retirement goals have crystalized nicely. We save a ton into Cheryl’s 401k and into a non-qualified brokerage account. In the years when I made money, we used an SEPP plan also.

  • justin@thefrugalpath says:

    Many people seem to think money for retirement is just going to fall from the sky and land in their bank accounts. And since we do not have personal finances classes many people are ignorant about the power of compounding interest and have become too scared or believe that the markets are rigged. Lastly, consumerism makes people believe that they need to spend in order to be happy.

  • femmefrugality says:

    Savings will start the day I start working again! I don’t have a clue what I’m doing, but I know I’m going to start doing it ASAP.

    • John says:

      I hear you, that can make it difficult. There’s a lot of free info available online, I encourage you to use some of it to help you out when you get started.

  • Jason Clayton | frugal habits says:

    I think I remember reading this the first time you posted it. (Still as good as the first time) The easiest mistake, anyone can avoid is to not miss out on free money. If your employer is offering a match, at least contribute what you can to get the match. This is easy money.

  • David @ Bankruptcy Canada says:

    I have no plans of retiring yet. I still have many years ahead. However, it is quite alarming that a lot of people are not saving anything for their retirement. This is something that people working right now should do. Be frugal as well. You need to enjoy your life after working so hard for so many years. This will not happen if you have not saved enough.

    • John says:

      Great points David. I could not agree more. Getting to the point where you can enjoy retirement at some level will not happen without putting money away.

  • Harry @ PF Pro says:

    I always tell beginning investors that your contributions have the most impact when you’re young or first starting to contribute. If my account is at 20k and I contribute 10k in one year, I’ve increased my value 50%. 20 years later when I’m at 200k, my 10k contribution doesn’t affect the value by nearly as much.

    • Weasel says:

      This is a very good way to look at it. When you are just starting out it is all about how much you can save. The market will take care of compounding over time.

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