top of page
  • Writer's pictureMarcus P. Miller, CFP®, MBA

Investing For Retirement When You Have Cash Flow Concerns

Everyone wants to save for retirement, but sometimes cash flow problems can make it difficult to put away money. Fortunately, there are some strategies that you can use to still invest in your future even if you are having trouble making ends meet now. Here are a few tips that can help you boost your retirement savings without breaking the bank.

Increase Your 401k Contribution (slowly)

If you are receiving cost-of-living adjustments (COLAs) every year due to inflation, consider increasing your 401k contribution by 1% when you get the adjustment. This is a great way to increase your retirement savings without actually decreasing your take-home pay. You will also be taking advantage of compounding interest and tax benefits that come with investing in a 401k.

Example: If you receive a COLA of 3%, consider increasing your 401k contribution by 1%. This small increase (1%) will still provide compounding interest and tax benefits without drastically decreasing your take-home pay.


Allocate Performance Bonuses

If you receive any performance bonuses, allocate a large portion of them (50-100%) towards your 401k contributions. This is an easy way to maximize the impact of any bonuses you receive while still having enough money left over for living expenses and other wants or needs.


Increase Traditional Contributions instead of Roth Contributions

Increasing traditional contributions instead of Roth contributions is another great way to save for retirement if you’re having cash flow problems. By doing this, you will decrease your taxable income (and tax bill), which makes it easier to save even a small amount each month for retirement.

Note: Traditional contributions are money that you have not yet paid taxes on. This means that when you make traditional contributions, you get to lower the amount of taxes you have to pay for that year. When you take money out of a traditional contribution account in retirement, you will have to pay taxes on it like regular income.


Saving for retirement during cash flow problems doesn’t have to be impossible—it just requires creativity and strategy! Consider increasing your 401k contribution by 1% when you get a COLA, allocating a large portion of any performance bonuses towards your 401K, and increasing traditional contributions instead of Roth ones as ways to increase your retirement savings without breaking the bank. By taking these steps today, you’ll thank yourself later when you have more financial security in the future.


Legal Disclosure

The opinions expressed in this website are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security. We cannot provide financial advice if we do not know your specific financial situation. Please talk to your financial advisor or do your own research before making financial decisions. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Any indices referenced for comparison are unmanaged and cannot be invested into directly. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.

bottom of page