Lauren Cobello » Get out of debt » Retirement » 5 Expenses that are Stealing $1 Million of your Retirement
Most Americans are not ready for retirement. I learned not too long ago nearly half of families have no retirement account savings at all. And the average American between the ages of 50 to 55 has retirement savings of only about $124,000. This shouldn’t be happening. Yes, life is hard. And expensive. We live during one of the most prosperous times, so there is really no excuse! I had to find out why most Americans are having to work longer and having less money. In my research, I learned 5 expenses that are stealing your retirement savings.
Before I get into that, I will start by saying “an ounce of prevention is worth a pound of cure.” I contribute to my retirement through both a 401K plan through Vanguard and also through Betterment. You can check out Betterment here.
According to CNBC, the average American family has car payments that total $531 per month. Instead of paying that $531 to a car payment, you put the $531 into a fund earning 6% interest for 30 years, you would be $536,064 richer by the time of your retirement.
So – what do you do instead of pay a car payment? The first thing is to understand how important it is to know how to maintain your car in the smartest and most frugal way possible. Don’t be afraid of driving well-used cars! Instead of trading in and upgrading your car once it reaches 100,000 miles, you can buy a car with cash at 100,000 miles and drive it for another 100,000!
2.) Cell Phone Bill
The average monthly cellphone bill is $113 according to a 2019 CNBC report. Verizon Wireless customers paid an average $148 per month, AT&T and T-Mobile customers shelled out an average of $144 per month. That means that for my family of six, we could be looking at $438 per month when all of our kids are grown and ready for their own phones.
If you switch to a phone company like Republic Wireless and get on a comparable plan, you would pay around $20 per month instead of $148, a savings of $108 per month if you have 2 lines! If you placed that savings in a retirement fund like an IRA, 30 years later it would grow to $108,488!
3.) Your Grocery Bill
When I am working with clients in my online Crush Your Debt Course, the #1 area where they are overspending is on their food budget. American’s spend an average of $1,100 at the grocery store per month. This was not only an expense stealing from my retirement but my overall household budget as well. When I first started budgeting, I took our grocery bill from $1,000 per month down to $200 per month. I fed my family on this amount for three years before increasing it to $125 per week when our family grew.
I keep my budget this low by using my own ALDI MEAL PLANS and by Freezer Cooking. Watch how simple it is in the video below, and then you can purchase a plan here.
If you found a way to save $400 per month on your groceries and instead put that money into a retirement account earning 6%, you would have an additional $401,806 in your retirement account in 30 years!
4.) Student Loan Payments
The average class of 2020 college graduates has $32,731 in student loans with approximately 6% interest on that loan.
Credible.com reports that their borrowers who re-finance through them and chose a loan with a shorter repayment term ended up reducing their interest rate by 1.71%. They will end up paying an average of $18,668 less over the life of their new loan, as well as paying it off 59 months quicker.
If a 30-year-old with student loans refinances and the loan is paid off in 15 years and the monthly savings was placed in a retirement account, at age 65 they would be $47,373 richer.
Interested in refinancing your student loans? We recommend using either Credible.com or SoFi.
5.) Insurance Costs
Lowering your insurance costs is not as hard as one may think. In fact, many do not even know that they can be lowered.
Here is the key: search for an independent insurance agent and let them do the shopping around for you. We saved $100 per month off just by using a free independent insurance agent.
If you were to take that $100 per month and invest it for retirement for 30 years, you would be $100,451 richer! For a simple change like this, I would say that is worth it!
In summary, start with simple changes to your monthly budget. Then, take the money and set it aside in a retirement account. You will be $1,194,182.00 richer when it’s time to retire!
In my opinion, many of these expenses stealing your retirement can be easily reduced and the rest saved in an interest-earning account. Stop letting them steal from your retirement, and enjoy life more and sooner!
We’ve been with Republic wireless for about four years now. Great service and you can’t beat the pricing!!!
Lauren, what foods did you eat? My kids and I are on special diets (GAPS/Paleo), and we spend about$1000 a month on food. It is insane. I know some areas.where I am spending more than necessary, and we buy organic meat as much as possible and only some produce as organic. No boxed foods, most everything from scratch. Do you buy the cheapest cuts of meat and conventional produce, also lots of pasta? I can’t imagine eating this way for the price you cited.