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How to Fully Fund an IRA When You Have No Extra Money

saving for retirement

Everyone knows how important it is to save for the future but sadly, about half of families in the U.S. have nothing set aside for retirement. Whether it’s lack of access to an employer sponsored retirement plan, stagnant wages, or the lure of instant gratification that makes paychecks disappear, it’s clear that Americans are not saving enough. No one can make companies offer 401(k) plans, and it isn’t always possible to control what a job pays, but there are other ways to fund retirement, even when you seem to have no extra money.

Set up an IRA

If you’re job does not offer a retirement plan, it’s very easy to set up an IRA. I personally like Betterment for beginners because you won’t have to choose funds or rebalance, but there are many low cost brokerages that will allow you to open an account with no minimum. For 2016, IRA contribution limits are $5,500 with an extra $1,000 catch up contribution allowed if you are over age 50.

A Roth IRA offers no tax benefits upfront, but any money deposited can grow and be withdrawn tax free after age 59 and a half. Singles earning less than $117,000 and married couples making less than $184,000 can contribute the full amount. Phase-out limits apply to those whose incomes exceed these limits.

Anyone under age 70.5 with earned income can open a traditional IRA. Depending on certain variables, you may be able to deduct contributions to this type of IRA.Withdrawals after age 59.5 are subject to taxes.

Don’t put off saving because you can’t decide which type of account to open. Choose one and get started. Doing nothing is a million times worse than choosing the wrong type of IRA.

How to Find Extra Money

To fully fund an IRA if under age 50,  you’ll need $5,500 or $458.33 per month. It may be easier than you think to come up with the money without too much sacrifice. Start by looking at your monthly spending. What can you cut or lower?

CableCutting cable and replacing it with streaming options should save at least $60 per month, maybe more.

Cell Phones– From dropping contracts and switching to a low cost carrier like Republic Wireless or Ting to simply negotiating for a lower rate or cutting data or minutes packages, there are lots of ways to save money on cell service, at least another $50 per month.

Internet– As I was writing this post, it inspired me to call my internet carrier to ask about new promotions. Signing up for e-statements and auto pay scored $14 per month off my bill.

Food– Americans often spend more money in restaurants than they do on groceries. Cutting back on eating out once or twice a month could save $50-$100. Brown bagging lunch easily saves $10 per day.

Insurance– If you have a good driving record and haven’t filed any recent claims, shop around for car better car and homeowner’s insurance. Combining multiple policies can also save money. We saved over $1,000 a year by combining our primary residence and rental property insurance into one policy.

Memberships and Subscriptions– Are you paying for services or products you don’t use? Gyms, magazines, satellite radio, admission to the botanic gardens; people sign up for numerous things thinking they are a good deals. Realistically, we don’t have the time or desire to use them to their fullest extent. Cut out anything you pay for but don’t receive value from.

If you can cut one or more of these expenses, that should put you halfway to your monthly retirement savings goal.

Make More Money

The sky is the limit when it comes to making more money. It really depends on how hard you want to hustle. Making $250 extra per month shouldn’t require a ton of work. Look for something you can spend a few hours per month doing without causing too much stress in other areas.

Freelance Writing/Blogging

Freelance writing and blogging can easily earn that much per month, but it does take lots of work on the front end while building a reputation. There are a number of sites that pay freelance writers per post, but you’ll have to pitch and write well to be accepted.

You can also churn out money from a  content mill or Fiverr.  Many people who freelance for a living hate content mills, but this type of site pays for writing on just about any topic. Do not spend hours and hours for a $10 paycheck, but if there is a topic you already know lots about and can knock out an article while watching TV, why not?

If writing is not your thing, there are other ways to earn a few hundred dollars a month.

  • Babysitting/ Pet Sitting
  • Teaching sports/music lessons
  • Tutoring
  • Adding a few fill in shifts per month in your current occupation.
  • Making Cakes or Cupcakes
  • Face Painting at events
  • Rent a room to graduate students or medical interns for a semester
  • Drive for Uber

It is possible to turn any skill you have into a money maker. Put your name out there through friends and family or on Craigslist and Facebook. Before you know it, you’ve got enough money to fully fund your IRA without a ton of effort. Do remember that any extra income earned is subject to income tax, so save about 30 percent until completing your tax return.

Why Doesn’t Everyone Do This?

According to this article in Money magazine, procrastination and lack of financial literacy are the reasons 90% of Americans can’t save. I know I used to be guilty of both. Thinking you’ll have plenty of time paired with lack of understanding about compound interest and how to budget and track spending is a deadly combination.

The good news is that you don’t have to know everything to stop procrastinating about retirement savings. Today is the day to get started, and there is no reason you can’t at least fully fund an IRA. What’s holding you back?

Have you let procrastination or poor financial literacy stop you from saving? 



About Kim Parr

Kim Parr is a private practice optometrist, freelance writer, and personal financial blogger. You can follow her journey to 20/20 financial vision at Eyes on the Dollar.


  1. I babysat in my early 20s because the hours were flexible, and I actually made quite a bit of money doing it. Most people could find a way to make some extra cash if they really wanted to – even if it was raking leaves, mowing grass, painting, or doing some type of clean-up.

  2. Every time I surprise when I found the fact like this: “Lack of financial literacy are the reasons 90% of Americans”. Sometimes I think that I am from Mars or some other planet. All my friends and I deeply understand all aspects of personal finances. This is most popular theme for us. how is possible that someone with Internet live fully ignorant about personal finance?

    • Actually from the circle of my friends, many are quite financially illiterate! Even though I’m in my 30s, a couple years ago I didn’t know what is IRA, and I didn’t know the benefit of saving in 401k. Okay I knew 401K is tax deferred long time ago but I didn’t understand its power of tax free growth.
      Reading around blogs like this definitely helped me become more financially educated. I’ve just opened IRA a couple days ago (luckily I can still contirbute to 2015 IRA) and I’m starting to contribute to 401k now.

  3. IT def. is a struggle for many people to fully fund retirement accounts. The problem today is the amount of debt I believe, and also like you said people’s lack of understanding investing. Start today to put away any amount you can afford even if you cant fully fund it, some is better than none.

  4. It is important to save for retirement. If you are unsure of what to do or if you can even afford it, I would recommend speaking with a financial consultant.

  5. Freelancing is something almost everyone overlooks. Most people have some type of skill they can market and put out there. If not, it’s easier than ever to learn one. While it can take some time to get the freelancing machine going, once the systems are in place it’s a pretty stable income. Combine that with trimming your expenses and you’re golden!

  6. It definitely is a struggle for many to fund their IRAs and so often it comes down to that financial literacy piece or being unwilling to make changes. They don’t realize their lack of change is only going to hurt them in the long run – I know I was guilty of that myself when I was younger. I’d also add even working overtime at your current job to make extra money – so long as you’re committed to using that extra towards IRA contributions.

  7. I definitely should have shopped around more for car and home insurance. I did it this past summer finally, and we saved around $800 combined. And that was *with* an at-fault accident on our records a few months before!

    I’m kind of kicking myself that we didn’t check sooner, but at least it kept costs down this time. This summer, I’ll be sure to check again.

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