How do I Save for Retirement on a Shoestring Budget?

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  • Written By: Geri Terzo
  • Edited By: A. Joseph
  • Last Modified Date: 17 January 2020
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Saving for retirement can be an ominous task with the greatest of resources, let alone on a shoestring budget. That does not, however, mean that even with minimal funds to invest you cannot prepare yourself for such an important event as retirement. It does mean that you should take advantage of all resources available to you, such as a company matching program in a retirement fund and other creative means to stretch a shoestring budget.

You should incorporate saving for retirement into your monthly budget plan. Even if funds are extremely limited, without earmarking a percentage of an income stream for a particular goal, nothing probably will be directed toward it. Clearly, the more that is set aside for retirement the better, even on a shoestring budget.

If possible, save 15 percent of your monthly income for retirement. Eventually, if things loosen up and more funds become available, increase that percentage to compensate for the times that no money or little funds were contributed. You might even sign up with your bank to have a percentage of your salary automatically directed into a savings account.


Many companies have some type of retirement savings plan in place. You might need to ask your employer's human resources department about this if the program has not been made clear. Saving for retirement is about growing an investment, so this is a sure-fire way to take advantage of a creative opportunity to help you reach your goals. For instance, if you agree through your company matching program to devote 5 percent of your salary toward the retirement fund, your employer might match that monthly contribution. This is often considered free money, and as a result, you are saving twice as much as you would be doing on your own.

Retirement is about growing wealth and not just preserving it, and this is where investing comes into play. It might seem difficult to invest on a shoestring budget, but it can be done. To open up a retirement account with a professional money management firm might require a minimum investment. If you don't have that money upfront, keep saving for retirement in your monthly budget, and when you have enough, use that money to open up a retirement savings account with a professional firm.

If you are investing on your own without the support of a company, you will have to make the most of your shoestring budget. In the United States, a common choice is a Roth Individual Retirement Agreement (IRA), which is among the simplest of retirement investment vehicles that contain some tax advantages. Also, mutual funds are a way to spread your resources because you gain exposure to multiple stocks and bonds and the help of a professional money manager for an upfront investment and a fee. Some mutual fund companies will waive the minimum investment requirements if you agree to automatically direct a certain amount of money into the account each month.



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