Planning for retirement can feel overwhelming, especially when you don’t make much money. But the good news is, saving for the future isn’t about how much you earn or contribute each month. Instead, it is about making smart choices with your money and optimizing your savings as much as possible. Even small steps taken today can lead to significant progress over time.
No matter your financial situation, a secure and fulfilling retirement is still within reach, and I will show you how to achieve that in this post. Let’s explore practical and achievable strategies to help you save for retirement when you don’t make a lot of money.
1. Start small
Even if you don’t make much money, you can save for retirement. Instead of waiting for your income to double or triple before saving for retirement, start today and start small. Retirement savings accounts don’t have minimum saving rates, which allows you to save for retirement even on low income.
Even modest contributions to a retirement fund can grow over time. For example, you can save as low as 1% of your income toward retirement. Even if you can only afford to save $20 monthly toward retirement, please do so. These small savings will eventually compound and help boost your retirement savings. So, begin with whatever you can afford, even if it’s just a few dollars a week or a month.
2. Take advantage of employer plans
One of the easiest ways to save for retirement, especially when you don’t make much money, is to take advantage of employer retirement plans. Most companies offer 401(k)s and 403(b). You need to contribute to your 401(k) even if you don’t have too much money.
The following are some benefits of contributing to a 401(k), especially on low income.
- Higher contribution limits. With a 401(k), you can contribute up to $23,500 in 2025, much higher than other retirement savings accounts.
- Employer match. Most employers match your contributions to a certain percentage of your gross income, which is considered free money. For example, if your employer matches your contributions up 5%, you will receive a $5 match for every $100 you contribute to your retirement plan until you have contributed 5% of your gross income.
- Tax benefits. If you have a pre-tax 401(k), your contributions will help you minimize your current tax liabilities, which is essential to grow your retirement account when you don’t make enough money.
So, if your employer offers a retirement plan like a 401(k), contribute enough to get the company match. It’s essentially free money for your retirement.
You might also like this guide, which details the best way to save for retirement.
3. Open an IRA
Do you want to save for retirement but don’t make much money? Consider opening an individual retirement account(IRA). These accounts do not require minimum contributions, meaning you can contribute as little as a few dollars.
Individual Retirement Accounts (IRAs) offer tax advantages and can be opened independently of your employer. Banks and online brokerage companies are good places to open an IRA. There are two types of IRAs you can choose from.
- Traditional IRA: Contributions are tax-deductible, but you pay income tax when you enter retirement.
- Roth IRA: Contributions are post-tax, but withdrawals are tax-free in retirement.
You can contribute up to $7,000 to an IRA if you are under 50 and $8,000 when you are over 50 in 2025.
Check out this guide on how to open a Roth IRA in six simple steps.
4. Automate your savings
Automating your savings is another strategy to help you save for retirement when you don’t make much money. Low-income earners usually don’t save for retirement because they spend all their earnings and have nothing left every month. Some people call this living paycheck to paycheck.
Automate your savings to minimize the risks of spending all your earnings or forgetting to save for retirement when you don’t make enough money. For example, if you only have $50 to save for retirement each month, have that amount automatically saved in your retirement accounts, such as a 401(k) plan or IRA. Automation also helps you consistently save for retirement without thinking much about it.
5. Cut expenses
Not making enough money or having a lot of savings does not mean you cannot save for retirement. A clever way to save for retirement on low income is to cut back on expenses and use those savings toward retirement savings. To effectively use this strategy, look for areas in your budget where you can save money—whether by eating out less, canceling unused subscriptions, or shopping for deals. Then, redirect these savings into your retirement fund.
If you only saved $20 in your IRA, cutting down on expenses can help you save $50 more. If you can achieve this goal, your retirement contribution will jump to $75! Every dollar counts when it comes to retirement savings.
You might also need to pay off high-interest debt such as credit card balances and costly personal loans, as these debts can prevent you from growing your retirement accounts. The debt avalanche method is the best way to pay off debt quickly. If you need guidance on managing your debts, check out this guide detailing the best strategies to manage debt, even on low income.
You might also like 20 clever ways to reduce expenses and increase savings
6. Earn extra income
Whether you want to save for retirement or not, if you are living paycheck to paycheck and have nothing saved each month, it is a sign that you need to increase your income. Fortunately, there are many ways to boost your earnings. You can get a raise at your current job, switch jobs, or pick up a part-time job.
Another way to earn extra income is to consider side gigs, such as freelancing online or pet sitting. Any small extra earnings can be dedicated solely to retirement savings. One of my friends works one day a week babysitting kids and uses those earnings to save in her IRA. I found this strategy to be one of the ways to save for retirement when you don’t make enough money.
Here are 49 best ways to make money fast
7. Focus on low-cost investments
Saving for retirement on low income means your contributions will also be small. This also means you cannot afford to pay the expensive fees associated with some investments. Choose retirement accounts that offer low-cost index funds or ETFs to safeguard your savings and get the most out of your investments. These funds are diversified and have minimal fees, which can help you maximize your savings.
8. Delay your retirement
Many people make the big mistake of retiring at 65, only to realize they don’t have enough money to live off.
If you don’t make enough money to save for retirement or don’t have enough saved, delaying your retirement date will help your savings grow even further due to compounding interest. For example, instead of retiring at 65, you can delay your retirement until you’re 70 or older. This will help you earn extra income during retirement through work without affecting the compounding effect on your account.
Additionally, working a few extra years will give you more time to save and potentially increase your Social Security benefits.
Are you struggling to decide when to retire? Check out this guide on the best age to retire to never run out of money
9. Take advantage of tax credits
Tax credits are dollar amounts you can subtract from your income tax to reduce your overall tax liabilities. Remember that this is not the same as a tax refund, as the former represents the difference between the amount you paid in tax and what you owe.
If you’re a low-income earner, you may qualify for the Saver’s Credit—a tax credit for contributions to retirement accounts. Other credits you might be eligible for to help you save for retirement when you don’t make enough money include child tax credit, education credits, child and dependent care credit, etc. Read more on the tax credits you might qualify for on the IRS website.
10. Track your progress
While you might not contribute much toward retirement when you don’t make much money, you still need to track your progress to know how you are doing. It is critical to periodically check your account balances and adjust contributions as your financial situation improves. For example, if you got a raise at your current job, increasing your 401(k) contribution might be a great idea instead of spending the money.
