Gabrielle Olya
·4 min read
Many Americans of all ages want to save more money this year. A recent Bank of America survey found that among those who made financial resolutions for 2024 (81% of all Americans), increasing savings was the most popular resolution (45%).
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For retirees on a fixed income, the resolution to save money may be even more necessary. GOBankingRates spoke with Lorna Sabbia, head of retirement and personal wealth solutions at Bank of America, to get her best money-saving tips for retirees.
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Create and Stick To a Budget
“Saving enough in retirement is especially important because it ensures you have enough money to enjoy a comfortable standard of living,” Sabbia said. “Start with a realistic budget that changes with your priorities.”
Once you establish a budget, reassess it regularly.
“I recommend looking at and reevaluating your spending on a monthly basis,” Sabbia said. “A clear understanding of your monthly cash flow allows you to assess where you may need to make adjustments so you’re not draining your savings.”
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Invest in Your 401(k) Plan
“Even before you approach retirement age, take a look at your 401(k) retirement plan and contribute at least the minimum to receive the employer match and begin growing your funds,” Sabbia said. “The more you invest and the earlier you start, the more your retirement savings have time to grow.”
It’s OK to start small, too.
“Remember, you don’t need to have a lump sum of money to begin your investing journey — a few hundred dollars is plenty to get you started,” she said. “Also, employees who may feel uncertain about how to invest their savings can leverage options like target date funds, which will cut out the need to create a diversified portfolio on your own.”
Seek Out Guidance From Trusted Resources
“Leverage any digital tools available through your employer to track progress toward your near-term and long-term goals,” Sabbia said. “There are also free resources like BetterMoneyHabits.com, which can be helpful in identifying how much you might need in retirement and how much you should try to be saving monthly.
“If available, participate in employee assistance programs (EAP) to help in balancing the responsibilities of your career and your personal life,” she continued. “Women especially face unique financial challenges, from the pay gap and workplace interruptions to higher healthcare costs on average, so seeking out resources and building a base of knowledge is vital to ensuring retirement savings success.”
Contribute to an HSA and an Investment Fund
“Balance current and long-term healthcare expenses by contributing to a health savings account (HSA) and investing funds,” Sabbia said. “You can use an HSA to cover current charges while also saving for future expenses by investing your savings. Those eligible for an HSA should start utilizing their HSA as early as possible, given the potentially advantageous tax incentives and the account’s ability to fund a portion of long-term retirement healthcare expenses.
“Those diversifying investments in their HSA can take advantage of the long-term saving possibilities,” she continued. “Over time, they can potentially build up their balance for unexpected major medical expenses at different life stages.”
In addition to an HSA, having a diversified portfolio can be particularly essential in your retirement years.
“Diversified investing can be an important and powerful way to make money last well into retirement, as it can provide a path to grow wealth in ways income alone cannot,” Sabbia said. “While it is never too late to start investing, the sooner you start, the better. A first step? Learn the basics. Investing doesn’t have to be complex, and building confidence to do so always starts with learning the fundamentals.”
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This article originally appeared on GOBankingRates.com: I’m a Bank Executive: 4 Best Money-Saving Tips I Have for Retirees
