Saving for retirement early is one of the most important things you can do to ensure the financial success of your future, and yet many people are unable to stick to a solid plan.
Just 14 percent of those surveyed said they felt very confident that they would have enough money to live comfortably in retirement, according to a 2012 study conducted by the Employee Benefit Research Institute. Around 60 percent of workers reported that the total value of their households' savings and investments was less than $25,000 -- hardly enough for a comfortable retirement.
If you started saving a bit too late and are looking to get a solid savings plan on track, follow these simple steps.
Related: 6 Tried-and-True Ways to Make Money in Retirement
1. Determine How Much You Need to Save
Although it can seem tedious to sit down and determine an exact numeric goal, figuring out how much you need to save is essential for planning. Plus, there are all sorts of simple-to-use online calculators that will allow you to easily figure out what you'll need come retirement. Don't get too caught up in the details, though -- a ballpark figure is a good place to start.
2. Eliminate Unnecessary Expenses
The next step is to make room in your budget to save more. Even if you have a solid budget that works for you, sit down to reevaluate where you could cut back. If there are extravagant expenses that could be cut out of your budget, such as a luxury car you're paying too much for, find ways to scale back -- like switching to a used vehicle.
You can also cut back by getting rid of unnecessary insurance policies that could be costing you a fortune. The standard insurance rule to live by? Only protect against losses you can't afford to take.
3. Pay Down Debt Quickly
Another key part of increasing your savings is eliminating debt as quickly as possible. Debt causes you to pay large amounts of interest over the life of the loan or credit balance, so you're wasting money that you could be putting toward your future.
4. Increase Savings
Now that you've cut back on unnecessary expenses and worked to pay down your debt, increase your savings to ensure you're putting away enough to reach your end goal.
The first step is to maximize your retirement account contributions; you want to be contributing as much as your employer allows to your 401(k). Your employer will often match a percentage of your contribution, which is free money toward retirement.
5. Consider a Roth IRA
A Roth IRA is a type of retirement plan that is generally not taxed, which means you won't owe taxes on any money you withdraw from the account after you retire. You can contribute to a Roth IRA in addition to your 401(k) or 403(b) plan. As of 2014, the maximum contribution allowed if you're 50 or older is $6,500.
6. Relocate or Downsize
By relocating to a less-expensive area that has a lower cost of living, or by purchasing a cheaper home, you'll be cutting costs in all aspects of life: food, utility bills, maintenance fees, property taxes, insurance and more. The change in lifestyle will allow you to increase the amount of money you put toward your retirement savings, ultimately helping to expedite your retirement timeline.
Sarah Kaufman is the growth manager for Betterment, the largest automated investing service that helps people to better manage, protect, and grow their wealth through smarter technology. The service offers a globally diversified portfolio of ETFs, designed to help provide you with the best possible expected returns for retirement planning, building wealth, and other savings goals.