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3 Surefire Ways to End Up With More Money as a Retiree

By Christy Bieber - Apr 8, 2021 at 6:46AM

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How many of these are you doing right now?

If you have the money to enjoy it, retirement can be an amazing time. You'll have the freedom to do things you've always dreamed of, and time on your hands to indulge your hobbies. The key, however, is having a large enough nest egg to do all that.

The good news is that there are three surefire ways to make your retirement account balance bigger and maximize the chances your golden years will be good ones. 

Older couple reviewing financial paperwork with calculator.

Image source: Getty Images.

1. Save more throughout your career

It may sound obvious, but saving more money throughout your life will leave you with a bigger nest egg as a retiree. The more you save -- and the earlier you start -- the better off you'll be. That's because the money you set aside can start working for you and building wealth.

You don't need to increase your savings by much to end up with a noticeably larger investment account balance. In fact, if you save just an extra $1,000 a year starting at age 30, you could end up with around $160,000 more by age 67.  

2. Take advantage of tax-advantaged accounts

Tax-advantaged retirement accounts help you end up with more money in retirement, because they either enable you to invest more throughout your life or they allow you to take money out tax-free as a retiree.

You can choose between traditional or Roth accounts when you invest for retirement. Traditional accounts provide an up-front tax break, so a $10,000 investment in your 401(k) only costs you around $7,800 (if you're in the 22% tax bracket). On the other hand, you invest in Roth accounts with after-tax dollars, but you won't owe taxes on withdrawals in retirement, so you'll be left with more to spend. 

Aim to max out contributions in a traditional or Roth 401(k) and/or IRA each year. Many people won't be able to max out both accounts, but get as close as you can. 

If you have a qualifying high-deductible health plan and are eligible, you may also want to max out your Health Savings Account. HSAs provide even better tax breaks than other retirement accounts because money is invested and withdrawn tax-free (provided it's used for eligible medical expenses). Once you've hit age 65, you can also withdraw money penalty-free from your HSA for any use -- even non-medical -- but will owe taxes at your ordinary income tax rate. 

3. Choose the right Social Security claiming strategy

Finally, if you want more money as a retiree, wait to start your Social Security checks.

Although you can claim them as soon as age 62, you'll be hit with early filing penalties that shrink your checks if you start benefits before full retirement age. And if you don't wait until age 70, you'll also miss delayed retirement credits that increase them. 

For almost six in 10 retirees, waiting until 70 is the right financial choice -- it results in both more money each month, and a higher amount of lifetime benefits. While you should consider your own personal situation when you make your filing choice, it's undeniable that delaying does result in bigger checks, and thus more monthly income to enjoy in your later years.

If you can raise your Social Security checks and invest more, you should be in great shape to make retirement one of the best times in your life.

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