3 Things to Do if You Feel Like You'll Never Afford Retirement

If you feel like saving for retirement is impossible, you're not alone. An estimated 55% of Americans are worried they won't be able to achieve retirement security, according to the National Institute on Retirement Security.

These fears are also not unfounded. With high inflation and expensive housing prices, many people are struggling to cope with today's living costs. Preparing for costs decades in the future may seem completely impossible.

The reality, though, is that you must invest for retirement because Social Security alone can't support you. If you're not sure what to do, here are three steps to take today to get yourself on the path toward the security you deserve as a senior.

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1. Figure out your retirement number

The very first step is to figure out exactly how much you need to save. You can't start creating a retirement plan, nor can you know if you're behind, without knowing what number you're trying to reach.

Setting a savings goal doesn't have to be difficult. You can just assume you'll need 10 times your final salary, as that's a good rule of thumb. Or you can base your number on the amount of income you expect to need.

If you want your investments to produce a certain amount of income, take that number and multiply it by 25. So if you need $50,000 in income, you'd need $1.25 million saved, assuming a safe withdrawal rate (following the 4% rule).

After calculating that number, use the calculators at Investor.gov to see your target monthly savings. This is based on years until retirement and expected returns. If you need to save $1.25 million over 30 years and expect to earn a 10% average annual return, your goal number would be $633.26 per month. Even if you can't do that now, at least you know what you're working toward.

2. Automate some kind of investing, even if it's a small amount

The next key step is to set up some kind of automated investments. Ideally, you'd start investing your target number. But that may not be possible right now, and that's OK. As soon as you begin investing any money, your money starts working for you, and you benefit from compound growth (returns being reinvested and earning returns of their own).

If you have a workplace plan, you can sign up at work to have just 1% of your salary put into your 401(k) to get started. Or open an IRA at a brokerage firm. Most have no minimum investment required. Saving even a small amount each month helps you establish the habit, learn about investing, and begin growing your nest egg. And making the process automatic increases the chances you'll stick with the plan.

As you get raises, increase the amount you invest before getting used to the extra income until you reach your target.

3. Track your spending to see where you can free up money to invest -- even a little

Finally, it's worth trying to free up as much money as you can to invest more. Tracking your spending for 30 days can help. You can identify where you are overspending and redirect that money. And you can be more conscious of where your cash is going.

Taking these steps can go a long way toward getting you on the path toward a secure retirement, even if you feel that's impossible right now.

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