Saving enough for retirement can be a struggle. And if your goal isn't just to scrape by but to retire wealthy, you'll need to do much more than invest 10% of your income for your later years.
The good news is, there are a few tactics to try out that can maximize your chances of being in great financial shape when you're ready to leave the working world. Check out these three unusual techniques that Motley Fool retirement experts believe can help you retire rich.
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Max out your 401(k) contributions
Katie Brockman: Contributing to your 401(k) is one of the best ways to save for retirement, and if your employer offers matching contributions, you could accumulate more money in savings than you may think.
Matching contributions are essentially free money, so if you're not saving enough to earn the full match, you're leaving cash on the table. Over time, that unclaimed money could amount to hundreds of thousands of dollars in savings.
Say, for example, you're earning $50,000 per year and your employer will match your 401(k) contributions up to 3% of your salary. That amounts to $1,500 per year. Let's also say that you're earning an 8% average annual rate of return on your investments.
After 20 years, that $1,500 per year would amount to more than $68,000. In 40 years, you'd have nearly $390,000. That's only accounting for the employer match, too. Once you factor in your own contributions in addition to the match, you'd have at least twice that amount.
Even if you're already saving some money in your 401(k), you could still be missing out if you're not contributing enough to earn the entire match from your employer.
In the example above, say that you're already saving $1,000 per year, which your employer matches. But you're still missing out on that extra $500 per year in matching contributions. Assuming you're still earning an 8% average annual return, that $500 per year will amount to around $130,000 after 40 years.
Keep in mind, too, that your salary will likely increase as you get older. Because most employers match savings up to a percentage of a worker's wages, the more you're earning, the more you could potentially receive in matching contributions.
Saving for retirement is tough, especially if money is tight. But taking full advantage of your 401(k) match can make it easier to retire wealthy.
Buy real estate
Maurie Backman: You'll often hear that maxing out a retirement savings plan and investing it in stocks is a good way to grow wealth for your senior years. But there are investments you can look at outside of stocks, and one to consider is real estate.
Properties have a tendency to appreciate in value over time, and you can utilize them as an investment in different ways. First, you could buy properties in disarray, fix them up, and then sell them at a profit. It's a tactic known as house flipping, and it's a good way to make money.
Another option is to buy a home and use it as an income property, where you rent it out for many years and use the money your tenants pay you to not only cover your mortgage, but invest in other ways. The upside of going this route is that you can own a home for decades so that by the time you're set to retire, you can potentially sell it at a profit and walk away with a lot of cash for your senior years.
Of course, there's another option to consider if you don't want to own physical property but like the idea of investing in real estate. You can buy REITs, or real estate investment trusts. REITs are companies that own or operate properties, and there are different types you can look into. Industrial REITs, for example, buy up warehouses and distribution centers. Hospitality REITs typically have portfolios loaded with hotels. And entertainment REITs might own movie theaters and concert halls.
As a REIT holder, you'll be entitled to dividends, the same way you'd collect dividends by owning certain stocks. And that way, you can dabble in real estate without assuming the risk of having to own and maintain physical properties.
Save $100 every week of your career
Christy Bieber: Most people work for decades, but end up without the money they'd need to retire rich because they don't save enough of their hard-earned cash. If you make it a point to automatically invest $100 every week into a retirement savings account, you won't have that problem.
A $100 weekly investment would add up to $5,200 per year. If you contributed that amount to savings every year over a typical 40-year career and you earned an average of 8% annual return, you'd have over $1.34 million by the time you retire. By most people's definition, that's enough to be wealthy.
The key here, though, is consistency. You need to start saving your $100 per week early on and you need to do it every week so your wealth can grow over time as your money works for you. This could be hard at the start of your career if you aren't making a lot of money. You may even need to consider a side gig or putting in some overtime to free up that extra $100 to invest for retirement. Or you may need to limit luxuries such as dining out.
But if you make the commitment and set up automatic transfers of $100 every weekly payday (or $200 if you get paid biweekly), the payoff will be great.
