Stressed about saving for retirement? Focus on your ‘bottom line’

The cost of living is high — for some more than others — but a few changes in spending can alleviate the stress of balancing financial obligations and saving for retirement. 

Retirement tip of the week: Analyze your spending, and ask yourself if there are any changes you can make, both big and small, so you can put more money towards debts and retirement savings. 

More of us are responsible for our future financial stability than our grandparents were a few decades ago, and worries about certain government programs, such as Social Security, only add to that weight. The problem: the cost of living can be exorbitant, especially in certain parts of the country, and there are many other expenses to consider before some people feel comfortable enough to save for their old age.

See: Low-income earners and those with lost or cut wages in 2020: Don’t forget this tax credit 

Student debt, which adds up to $1.7 trillion across the U.S., is one of the biggest concerns for savers. But there are other expenses that have grown substantially, including housing and transportation. Younger Americans in particular may respond to these challenges by changing jobs in search of higher wages and delaying certain lifestyle choices, such as buying a home or starting a family. 

There are two ways to tackle all of this: earning and spending. Of course, making more money helps pay off debts and save for the future faster, but that isn’t always an option.

So here’s the bottom line. During a MarketWatch Live event about millennials and their paths to retirement savings, Douglas Boneparth, a financial adviser and president of Bone Fide Wealth, said one “unpopular opinion” surrounding these decisions is to sacrifice on the bottom line, even if it is disappointing at first. For example: look at the biggest expenses you have, such as housing or transportation, and ask if it’s possible to downsize. 

“Nobody wants to be told if possible to move home and live with parents and get a job locally — that’s not what you went to school for,” he said. But there are situations where the debts or payments are so large, finding a different living arrangement such as moving in with family members, finding roommates or living in a less-desirable apartment could really help. “If those are the decisions you have to make for the next four or five years when in your early 20s or even mid-30s to find yourself on the pathway to attacking or relieving student loan debt, then you have to make those decisions.” 

The alternative would be to continue to pay down the debts slowly or wait for the government to forgive a small portion of loans (possibly — Congress and the president have yet to agree on what that might look like). “It gets cloudy when you are trying to untangle the mess that student loans can be in one’s life,” Boneparth said. 

Also see: This new ‘Broke Millennial’ book has secrets for young people who don’t want to think about retirement 

This advice shouldn’t be equated to giving up the little pleasures in life. Instead, determine what actually brings joy and what doesn’t — and see if how you spend your money is aligned with those priorities. Erin Lowry, author of “Broke Millennial,” has a “line item” in her budget for lattes because as a self-employed person, she enjoys leaving her house to pick one up. 

Some people might find that they spend a lot of their money on take out, when they don’t mind cooking at home, or they are paying for subscriptions to magazines and services they barely use. In instances where “every dollar is spoken for,” keep track of cash inflows and outflows over the span of two weeks or a month, then see if there’s anything that can be changed. Also aggregate all the services you are paying for, including utilities and cable, and call providers to negotiate a lower price. Every dollar counts.