senior couple meeting with a financial planner

The average retired household spends $40,938 per year, and using in-home care or a nursing home can cost much more. In-home care on average costs $14-$24 per hour depending on your state, and a private nursing home on average costs $205 per day or $6,150 per month. Those costs add up quickly, especially if you plan to be retired for 20, 30, or even 40 years. If you want to enjoy a comfortable retirement with a comparable quality of living to your current situation, you’ll need to start saving. Whether you already have a savings plan or you’re just getting started, these ideas on saving can help you financially prepare for retirement even without a 401(k).

Open an IRA or a Roth IRA

An Individual Retirement Account (IRA) is a retirement account with tax-free or tax-deferred growth. You can save up to $5,500 a year or $6,500 if you are over 50, in this account. Traditional IRAs allow the earnings you make on your contributions to be tax-deferred, meaning you won’t pay taxes on them until you withdraw the money. Your contributions to your account will be pre-tax, which means you’ll be able to deduct the amount you save from your income.

Roth IRAs, on the other hand, are not tax-deferred, and you won’t be able to deduct your savings from your income. However, with a Roth IRA, you won’t pay taxes on your money when you withdraw it from your account. Your contributions will be post-tax; so though you’ll pay income tax on the money, it will grow tax-free. Both types of IRA provide a simple option for steadily investing in your retirement and taking advantage of potential tax benefits as well.

Set up direct deposit

Those with 401(k) plans have money withheld from their monthly paychecks and added to their retirement fund. The cut is automatic and the money is inaccessible, which makes it a nice saving option. However, if you don’t have a 401(k), you can easily mimic this system with similar results. Set up a direct deposit from your paycheck to an IRA or other investment account and make your retirement savings automatic. This ‘pay yourself first’ system will make saving a regular part of your budget and steadily compound your retirement fund.

Save raises, bonuses, and tax refunds

Though your first instinct with a raise may be to spend it (find a nicer apartment, buy a new car, etc.), you may want to consider maintaining your current cost of living and dumping your new earnings into retirement. Your lifestyle will stay the same and your retirement savings will quickly add up. You may also consider splitting your raise between savings and spending in order to boost your current quality of living while also helping your future self. Similarly, when you receive bonuses or tax refunds, add those to your savings or invest them. Though you may not enjoy the brief satisfaction of spending them on a vacation, you’ll find that this regular contribution to your retirement will make a significant difference overall.

Take advantage of employee match plans

If your employer offers a match plan on retirement deferrals, take full advantage of it. Find out the maximum amount that will be matched by your employer and make that your minimum contribution. These plans are free money that can only benefit you in the long run, so don’t wait to participate and to take full advantage of them.

Save 10-15% of gross salary

There is not a set amount that each person should have saved for retirement, but in general, advisers suggest saving 70-80% of your pre-retirement income. Though retirement savings should be determined by your cost of living, life expectancy, etc., a basic goal to work toward is saving 10-15% of your gross salary for retirement. This rate is a good starting point for individuals who start saving early. Those who start early and stick to this rate should be in good shape when retirement rolls around. If you’re getting started later, you’ll need to increase the percentage. There are various retirement calculators online that can help you determine if you’re on track with your savings or if you’ll need to raise your rate.

Start today

It may go without saying, but the time to start saving for retirement is now. The longer you wait to start planning, the higher the cost will be to your future self, literally. Compound interest is a powerful means of growing your savings across time, and the sooner you begin the more growth potential your savings will have.


Retirement may seem ages away or just around the corner, but either way, it’s important to prepare. Saving for retirement is a literal investment in your future that will have benefits not just for you but for your family as well. The better you save, the better quality of life you can expect to have as you age, and the more prepared you’ll be for whatever the future brings.