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3 Little-Known Ways to Save More for Retirement

By Matthew Frankel, CFP® – Updated May 30, 2017 at 11:28AM

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If your retirement planning needs a boost, here are three ways you could get one.

This article was updated on May 10, 2017, and originally published on May 16, 2016.

The majority of Americans save for retirement through their employer's plan, such as a 401(k). And the most common 401(k) contribution rate is just enough to take advantage of the employer's matching contributions. While this is certainly a good way to lower your tax bill and build a retirement nest egg, it may not be enough on its own. With that in mind, here are three things you may not have known about retirement saving that could give you the tools or the motivation to save more.

The government could give you free money for saving (seriously)

If you're a low- to moderate-income household, there is a tax credit that's specifically designed to encourage you to save for retirement. Officially known as the Retirement Savings Contributions Credit, but more commonly known as the Saver's Credit, this credit can put $1,000 back in your pocket just for contributing to a qualifying retirement account.

Older couple taking a walk.

Image source: Getty Images.

Depending on your income and filing status, the Saver's Credit is worth 10%, 20%, or 50% of your first $2,000 in retirement savings contributions for the year. If you file a joint tax return with your spouse, each of you can take this credit. Here's the specifics about the credit and income limits to qualify:

Credit Amount

Married, Filing Jointly

Head of household

Single and Other Filers


AGI up to $37,000

AGI up to $27,750

AGI up to $18,500










AGI above $62,000

AGI above $46,500

AGI above $31,000

Data source:

The credit can be applied to IRA contributions or contributions to your employer's plan, whether it's a 401(k), 403(b), or governmental 457(b) plan. It can also be used with less common retirement plans such as a SEP or SIMPLE IRA.

Keep in mind that this credit is in addition to the other potential benefits of retirement saving, such as a tax deduction for your contributions, tax-deferred investment growth, and employer matching contributions. So, if you qualify for this credit, it's a no-brainer. After all, who turns down free money?

You can still contribute to a Roth, even if the IRS says no

A Roth IRA won't get you a tax deduction on your 2016 tax return, but your eventual withdrawals in retirement will be 100% tax-free. There are some other Roth benefits as well, such as no minimum withdrawal requirements and the ability to withdraw your original contributions at any time, just to name a couple.

The IRS only allows taxpayers whose incomes fall under certain limits to directly contribute to a Roth IRA. Married joint filers can make a full contribution if their AGI is less than $186,000 and are eligible for a partial contribution with AGI up to $196,000. And, for single and head of household filers, the thresholds are $118,000 and $133,000, respectively.

If your income exceeds the cutoff, you may be pleased to learn that there is a "backdoor" method of contributing. Since 2010, anyone is eligible to convert their IRA assets to a Roth IRA, no matter what their income or filing status. If you received a tax deduction on the original contributions, you'll have to pay taxes on the amount you convert, but if you contribute to a traditional IRA and convert quickly, this shouldn't be an issue.

HSA: A great retirement account?

We've all heard of 401(k)s and IRAs as retirement savings accounts, but not many people consider a Health Savings Account (HSA) when deciding where to stash retirement money.

However, the HSA could be a valuable addition to your retirement planning. You're eligible for this type of account if you have a high-deductible health plan, defined by a deductible of at least $1,300 for singles and $2,600 for family coverage, and out-of-pocket maximums of $6,550 and $13,100, respectively.

If you're eligible, you can contribute up to $3,400 (single) or $6,750 (family) to a HSA for the 2017 tax year, and unlike a flexible spending account (FSA), you can roll over any unused balance from year to year. Not only that, but you can choose to invest your account in a variety of funds to let it grow and compound over the years.

The tax structure of a HSA is similar to a traditional IRA, with one big added benefit: Contributions are deductible on your tax return, and withdrawals can be made after 65 with no penalty. And, if the money is used for qualifying healthcare costs, the withdrawals are completely tax-free. In other words, you get a double tax benefit for healthcare expenses, in addition to the retirement savings benefits.

Now, there are some key drawbacks to a HSA versus an IRA I should mention. If you need to use the money in your account before retirement for a non-healthcare reason, you'll face a 20% penalty (the IRA early withdrawal penalty is just 10%). Further, the "retirement age" when you can start using your money penalty-free is 65 -- more than five years past the IRA retirement age of 59-1/2.

However, the added healthcare benefits of a HSA may outweigh the drawbacks. This little-known retirement savings vehicle deserves to be considered when planning your retirement saving strategy.

What should you do?

The best way to save for your retirement depends on your personal situation. Many people like to use Roth IRAs to supplement their 401(k), as it allows them a combination of pre-tax and after-tax retirement savings, as well as access to a wide variety of investment choices. Others prefer the HSA, as it allows them to save big bucks on their tax bill if unforeseen medical expenses arise.

The point is that you should look at your own goals, tax preferences, and how active of a role you want in your retirement planning, and make the best decision for you and your family. In short, the more you know about your options, the better-equipped you'll be to make those choices.

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