People who practice “burst savings” have a higher chance of having enough money to provide for a comfortable retirement, according to research by Hearts & Wallets. In fact, “64% of burst savers were able to build a nest egg equal to at least 10 times their annual pay,” according to an article on CNN Money.
What is burst savings? Simply put, it is putting a portion or all of any bonus, tax refund or windfall into retirement, or an aggressive way to save.
As part of their “How to reach $1 million,” CNN Money has compiled a list of tactics one can use to save enough money to get to $1 million. The process, however, may not be easy for everyone to accomplish, but timing seems to be the key.
As CNN Money suggests, one method is to time the extra savings whenever expenses fall or income spikes, such as when children leave home or when both spouses are working. Additionally, socking away a portion of windfalls is another way to build retirement savings quickly.
The author suggests saving 15% of your income each year for at least 10 years. While the idea seems good, I believe it could be difficult for people to do successfully without controlling spending.
One of the suggestions to ease the pain of saving that much money is to control expenses, but the author notes, “It’s not really buying daily lattes or the latest tech toy that most undermines” a person’s ability to save. It’s actually the high-dollar items that make it more difficult: a home, a car or a child’s college education (although, I really don’t like the idea of cutting back on this).
Another good idea is to pick up a small side job doing something you are interested in. Perhaps launching a catering, craft or handyman service could help you save and maybe turn into an extra source of income once you retire.
It’s a good article that got me thinking. Take a look and let us know what you think.