When you read about retirement income security, you probably read a lot about asset allocation. I also write about it a lot. It is, after all, important, considering how reliant we all might be on our 401(k)s.
But it's not the end of the story, or even the most important part of it. A lot of people out there just don't have a great deal of savings in the first place (less than $100,000 on average), so we need to look to other strategies to boost our financial security in retirement.
Here are three that might seem obvious, but have outsized practical benefits.
1. Control your spending
Spending less today has an outsized effect on your future retirement. Not only will it mean that you need less to live on, but you can deploy those savings to your 401(k), meaning a bigger pot of money to support yourself with.
It can be hard to cut costs, but there are a few ways to do it without feeling completely deprived. The first is to sock away your raises -- after all, you're not used to spending that money anyway, so it won't be missed.
Second, shop around for better deals on big-ticket items. If you have the full cable TV package because you love it, more power to you, but you might be able to pay less just by looking for a promotional rate.
Finally, think about the things you don't care about so much, and cut there. For example, if you hate the gym and prefer to go running in the park, why are you paying for a gym membership? If there's only two of you, do you really need a four-bedroom house? Think along these lines, and you might surprise yourself with what you can live without.
2. Start earlier
The earlier you start, the more time your money has to grow, and the less you need to save in order to reach your targets. By one estimate, starting saving at 25 instead of 45 would reduce your required savings rate by two-thirds.
This is obvious, you're thinking, and of course it is: The most important things often are. But that doesn't make it any easier to do!
To get started, consider signing up for your 401(k) and saving your next raise. You won't miss it, and as you see your account grow, you might find it motivating to reduce your spending and set aside more.
Another way to get going is to open an IRA and automatically transfer an amount you won't really miss each week. I like the weekly transfer because it means a smaller amount goes out. It can be $15! Sounds like nothing, but in a year, that's $780 you might have otherwise spent on who-knows-what.
Start small like this, and build on your momentum: You might be surprised by how far it can take you!
3. Retire later
Perhaps it's unpopular, but there is always the idea of retiring later. After all, we are living longer these days, so maybe postponing a few years wouldn't be so bad.
One study found that by retiring at 67 instead of 62, the average American could significantly offset the effects of subpar investment returns, making it possible to withdraw more from a 401(k) without worrying about what the S&P 500 is doing in the meantime.
There's also evidence to suggest that people experience drops in their mental faculties after retirement—something about retiring is actually, on average, a bit bad for our intellects. From that perspective, work might not only help shore up your savings and Social Security benefits, it could make it possible for you to enjoy your golden years more than you might have otherwise.