Earn $50,000 a Year? Here’s How You Can Save for Retirement

Although it's not a particularly high salary, it's enough to carve out long-term savings.

You'll often hear that it's important to save for retirement rather than rely on Social Security alone to pay your bills down the line -- especially since those benefits pay the average recipient less than $2,000 a month. But what if you don't earn a particularly high salary? In that situation, you might struggle to carve out room for IRA or 401(k) contributions.

The Ascent reports that the average U.S. income is $97,962. If you're pulling in $50,000 a year, it means you might have a lot less leeway on the long-term savings front than someone earning almost double that amount.

The good news, though, is that you can save for retirement on $50,000 a year. You just need to set priorities and make sure you're not wasting money on needless expenses.

It'll help automate the process

As a general rule, it's a good idea to set aside 15% to 20% of your income for retirement savings each year. But if you earn just $50,000 a year, you may not be able to do that. And that's okay.

Saving 3%, 5%, or 10% of your income is better than saving nothing. So if that's all you can swing right now, so be it.

That said, to see what sort of retirement plan contribution is feasible every month, you'll need a budget. Set one up using a spreadsheet, budgeting app, or even paper.

Start by listing your essential expenses -- things like your rent and car payments, grocery bills, healthcare costs, and utilities. Then, see what you're left with. From there, you can allocate funds for your retirement plan and then divide the rest of your money for things like streaming services, social outings, and trips.

You may end up with less money to spend on the things that make you happy. And yes, that's hard. But you might also get better at determining which luxuries are really worth paying for.

Once you've figured out how much money you can afford to contribute to an IRA account or 401(k) -- keeping in mind that it may be as little as $50 or $100 a month, which, again, is okay -- put the process on autopilot so you're able to stay on track.

If you're funding a 401(k), you'll have to automate the process, because your contributions will be deducted from your earnings. But if you're going the IRA route, find one with an automatic savings feature, and then arrange for some money to leave your checking account every month at a preset interval.

The key is to start somewhere

You may be earning $50,000 a year right now, but you never know how much your income will grow through the years. It may be that three years from now, you're earning $60,000 a year. And in 10 years, you might be pulling in a six-figure salary.

Ideally, you'll increase your retirement plan savings rate as your income rises. But for now, do your best based on what you earn. If you prioritize retirement savings and start making those contributions, you'll give yourself a solid foundation to build on in the course of amassing long-term wealth for the future.