8 Best Strategies for Retirement

8 Strategies to Save for Retirement

By Matthew Frankel, CFP – Updated Dec 3, 2025 at 11:55 AM EST

Key Points

Boost retirement savings by setting aside 15% of annual income, including employer matches.
Minimize major expenses like housing and transportation to free up monthly funds.
Utilize tax-advantaged retirement accounts like IRAs and 401(k)s for compounded growth.

Retirement is the No. 1 financial goal of most Americans. But for many people, that goal is seemingly based more on aspiration than actual action. According to the Center for Retirement Research at Boston College, approximately half of those who retire at age 65 will be unable to maintain their preretirement lifestyle.

We know you want to be in the other half. Here’s how.

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A graphic listing 8 strategies to save money for retirement. — Image source: The Motley Fool

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Did you know?

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3. Save for the Biggest Expenses.

A key to a secure retirement is limiting your current consumption in order to fund that future consumption.

You’ve likely heard of financial gurus claiming you could be a millionaire if you give up your daily latte. While every little bit does indeed help (when compounded over decades), your financial destiny is more likely determined by how much you spend on the three biggest categories in the typical American’s budget:

Housing: According to the Department of Labor, housing expenses eat up a third of the average budget. Buying or renting only as much space as you actually need, and in locations that are not highly priced, can free up hundreds of dollars each month.
Transportation: According to Car & Driver, the price of a new car is more than $50,000. Consumers are taking out bigger, longer-term loans to afford these cars, and in many cases still owe money on a car when they replace it. The key to driving down these costs Is to Buy small to midsize fuel-efficient vehicles and keep them for 10 to 15 years. Getting a car to 200,000 miles saves $30,000 on average, according to Consumer Reports.
Food: According to the Department of Agriculture, Americans waste 30% of the food they buy. Since the average household devotes 13% of its budget to food, that’s almost 4% of annual earnings going in the trash.

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5. Invest for the Long-Term Now

You can set your portfolio up for success by choosing investments that have attractive long-term returns. According to Ibbotson Associates, here are the compound average annualized returns of the main types of investments from 1926 to 2019:

Large-cap stocks (such as those found in the S&P 500): 10.2% average annualized returns
Government bonds: 5.5% average annualized returns
Treasury bills (essentially cash): 3.3% average annualized returns

Those higher returns from stocks are the reason they are the investments of choice here at The Motley Fool. And you can get them by simply buying an S&P 500 or total stock market index fund, which -- with a single purchase -- makes you a legitimate part-owner of hundreds of the biggest companies in the world.

That said, the stock market is volatile and unpredictable. You can expect it to drop 20% or more every few years, and 40% or more once a decade. So, if you want to keep your money safer -- especially if you need it in the next three to five years -- it should be kept in cash or bonds. Not sure about the right mix for you? Consider a target retirement fund, which provides a prudent asset allocation based on your retirement date and gets gradually more conservative as the date approaches.

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Smiling person typing on a laptop. — Image source: Getty Images

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6. Take Advantage of Catch Up Contributions.

If you’re behind in your retirement planning, your mid-50s are a great opportunity to catch up by supercharging your savings. Uncle Sam agrees, which is why contribution limits to retirement accounts are higher for the 50-and-older crowd.

It’s also important to learn about the programs that will have a significant impact on your retirement, including:

Social Security: You can claim benefits as early as age 62, but the sooner you file, the smaller your monthly check. How much does it pay to delay? The payout increases 6% to 8% each year, up until age 70. In fact, studies suggest most Americans should wait until age 70 to claim Social Security…but alas, most don’t.
A defined-benefit pension: If you’re among the fortunate minority who will receive a check every month from your former employer for the rest of your life, take time to understand the formula and your options. Does retiring later result in a larger benefit? Can you instead take the pension as a lump sum? Is the pension fully funded, or is there a risk that future payments will be reduced?
Medicare: On average, employers cover 70% of the costs of health insurance. But once you leave your job, you’re on your own. Fortunately, Medicare -- the health insurance program for retirees -- kicks in at age 65. Before you retire, understand what Medicare covers, and whether you need supplemental insurance.

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8. Get Help with Retirement Planning.

If you’ve reached this point and are feeling overwhelmed, we understand. Retirement planning has a lot of moving parts.

If you think you’d benefit from some expert objective guidance, consider hiring a fee-only financial planner. Some will actually manage your assets (and charge a percentage of those assets) while also providing retirement analysis; others just provide the advice, and charge by the hour or by the project. It’s not a bad idea to check in with a retirement professional every five to 10 years, and especially right before you retire, to ensure you’re doing everything possible to have the retirement you’ve always wanted.

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Retirement Savings Strategies FAQ:

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About the Author

Matt Frankel, CFP, is a contributing Motley Fool stock market analyst and personal finance expert covering financial stocks, REITs, SPACs, and personal finance. Prior to The Motley Fool, Matt taught high school and college mathematics. He holds a bachelor’s degree in physics from the University of South Carolina, a master’s degree in mathematics from Nova Southeastern University, and a graduate certificate in financial planning from Florida State University. He won a SABEW award for coverage of the 2017 Tax Cuts and Jobs Act. He is also regularly interviewed by Cheddar, The National Desk, and other TV networks and publications for his financial, stock market, and investing expertise.

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