You don’t have to look at the larger economy to know Americans aren’t saving enough for retirement — there’s about a 50-50 chance you see this shortfall in your own personal economy.
There are plenty of reasons for the struggle. Many, such as low wages, high cost of living and limited access to retirement plans, are difficult to work around. But there are also small ways that we sabotage our ability to reach our retirement goals, often without even realizing it.
This isn’t about packing your lunch or giving up your morning coffee. Those suggestions are unhelpful at best and insulting at worst. This is about overcoming common obstacles — whether you’re saving 1% or 15% — to improve your retirement prospects.
1. Stop overpaying for your investments
If you have investments, there’s a good chance you’re paying too much for them. That might be true for the investments themselves, the fees associated with the account in which you keep them, or the advice you’re getting to help manage them. If you’re not sure, use a tool to analyze your 401(k) fees, or check your plan documents and fund prospectuses.
Target-date funds, the most popular 401(k) investment, are the worst offenders, says Dave Rowan, a certified financial planner and president of Rowan Financial in Bethlehem, Pennsylvania.
“The hidden problem that’s not broadly talked about is that they effectively have a double layer of fees, because they’re funds of funds,” he says. “They’re charging fees not only within the individual funds that make up the product, but there’s also an overlay on top to manage the fund itself.”
You’d be better off building your own portfolio out of low-cost index funds, which you can do by mimicking the holdings of a target-date fund or by working with an advisor or robo-advisor. One advisor, Blooom, specifically manages 401(k) plans.
2. Set a reasonable retirement goal
If you’ve ever been to the grocery store without a list, you know how this goes: Popcorn and yogurt-covered pretzels do not a dinner make.
It’s no surprise that people who have a written retirement plan feel more prepared than those who don’t. They’re saving in an intentional way for a set goal, even if they’re not saving enough. The first step to creating that plan is setting that goal, and the best way to do that is with a retirement calculator.
The best calculators, including the one linked, will give you a monthly savings target, in addition to that big scary number that tells you the lump sum you’ll need. But even that broken-down monthly number can be intimidating, depending on your situation. You don’t have to start putting that kind of cash aside immediately, but you’ll have a concrete figure you’re working toward.
3. Prioritize your dollars
A few things seem to be in a perpetual battle for our money. Debt payments, retirement savings, an emergency fund and college for the kids are some of the main contenders.
Prioritizing them is a bit like a game of rock, paper, scissors. Retirement beats college nearly every time.
Paying off high-interest-rate debt generally beats investing for retirement. But saving for retirement beats paying off low-interest rate debt, such as federal student loans, your mortgage and many car loans. The rule here is that if the interest rate is lower than what you could earn on your investments, you pay the minimum and invest the rest.
An emergency fund beats everything, at least until you have about $500 in the bank. That’s not enough for a true emergency fund, which should cover three to six months of expenses, but it’s enough to give you a cushion while you work on other goals.
The part of this that people tend to struggle with the most is putting retirement before college, which can feel like putting yourself before your children. There’s no doubt you love your kids. So love them enough to spare them your reliance on them, at least financially, in retirement.
4. Use the right retirement accounts
There’s one exception to the prioritization above, and that’s a 401(k) with matching dollars. If your employer offers you one, contribute enough — or work your way up to contributing enough — to grab that full match. After all, that money is akin to a 100% return on your investment, which puts the value in investing in it above the value in paying off even the most high-interest-rate debt — except for toxic debt like payday loans.
Once you’ve grabbed that match, you can turn back to hammering away at that debt or investing in an IRA. The choice between a Roth and a traditional IRA can make a significant difference: A Roth IRA makes a lot of sense for savers who expect their tax rate to be higher in retirement than it is now.
Don’t discredit small improvements
When you’re saving 1%, the general advice to save 15% for retirement can seem like a good reason to throw in the towel altogether. But while 15% might be the ultimate goal, maybe your goal should be getting to 2%. You can do that by making small steps.
One option is to allow your employer to increase your 401(k) contribution automatically each year. Many companies offer this now, and you may not even notice the missing money. If you do, you can always dial back your contribution.
Another option is to increase your savings rate every time you get a raise. “Instead of saying, ‘I need to get to 15%,’ say, ‘I’m at 3%. Can I get to 4%? Then can I get to 5% next year?’ ” Rowan says. “All of a sudden, you’re at 10% and you’re making really meaningful progress toward your goals.”
This article first appeared at NerdWallet.