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15 Ways to Save More Money for Retirement

By Selena Maranjian - Jun 8, 2022 at 7:00AM
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15 Ways to Save More Money for Retirement

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In general, the more we can save -- and invest -- for retirement, the better. Our earliest invested dollars have the longest time in which to grow, which is why it's smart to be aggressive about it while you're still young, if possible. And by the time we're nearing retirement, something might happen to cause us to retire earlier than planned (perhaps a job loss or health setback), which is another reason to not put off saving and investing. Here are 15 ways to kick your saving and investing into a higher gear.

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1. Pay yourself first

This is an old personal-finance chestnut -- but it works. Many people aim to save, but when they get their paycheck, they spend it all on nonnegotiable expenses and also on discretionary purchases, such as dinners out or a new TV. If you make retirement savings a priority and take money out of your paycheck for savings before spending it on optional expenses, you may end up saving a lot more.

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2. Automate whatever you can

One way to pay yourself first very easily, without any chance of procrastination, is to automate as much of your saving as you can. Many employers make it easy, allowing you to direct that a certain sum or portion of your paycheck be deposited in a certain savings or investment account, with the rest going into your checking account or whatever account you pay bills from.

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Piggy bank with dollar bills sticking out the top.

3. Bank your raise

Millions of us get a raise every year or two, even if it's just 2% or 3%. Such an increase may not make you feel that much richer, but if you just automatically move that money into your savings and investments, you probably won't miss it, and it can grow for you over time. You might just adjust your automatic investments to contribute greater sums to investment accounts. If you're earning, say, $75,000, a 3% raise amounts to $2,250 -- a meaningful sum to invest for your future. Meanwhile, if you haven't received a sufficient raise recently, ask for one!

ALSO READ: Have You Asked for a Raise in the Past Year? Here's Why You Should

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4. Sock away that tax refund

Tax refunds are another way to find extra dollars to save and invest. Ideally, you'll fill out your W-4 form optimally, which will minimize your refund -- because, after all, receiving a refund means you've loaned Uncle Sam that money over the year. Some people, though, find it handy to not be so precise on their W-4 forms, intentionally ending up with a meaningful refund -- which can be immediately turned over to retirement savings.

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5. Increase your savings rate gradually

What percentage of your income are you saving and investing? A commonly recommended rate is 10%, but that's far from enough for many people -- especially those who are a little or a lot behind. Whatever percentage you're saving, see if you can increase it by 1% (or more) in the coming year, and hike it again each year for at least a few years. For best results, have a solid retirement plan in place, so that you know how much you're aiming to amass and how you can do so.

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6. Shop around for lower insurance rates

Whatever you're paying for your home insurance, car insurance, and other insurance policies, there's a decent chance that you might be able to pay less, possibly saving several hundred dollars per year. Each insurer has its own algorithms for pricing policies, and they may change over time, too. It's worth spending an hour or two once a year on the phone, doing some comparison shopping to see if you can snag lower rates for the same coverage. (If you can afford to pay a higher deductible should you need to, increasing your deductible is another way to pay less.)

ALSO READ: Auto Insurance Industry Predictions for 2022

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Person smiling with a golf club.

7. Rein in a costly habit or two

This is a powerful money-saving move: reining in some expensive habits. For example, if you take the time to study just where your money is going, you might find that you're spending $200 per month on golfing, or $400 per month on dining out. Yes, you could save a lot by eliminating either of those expenses, but it would be a shame to remove some sources of joy. So consider just cutting back. If you can reduce your spending by $200 or $300 per month, you'll free up $2,400 or $3,600 per year.

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Person mowing lawn.

8. Do more things yourself

Most of us feel quite busy, between our work and family obligations, so it can be a helpful relief to just hire others to do certain things for us, such as tending to our landscaping, cleaning our house, or even cutting our hair. But if you can do some of those things yourself, you might save a lot. You might try cooking more yourself, too, while reducing trips to restaurants, and if you can learn to fix a leaky faucet or replace a broken toilet, you might save a hundred dollars or more.

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9. Invest in dividend-paying stocks

A great source of cash for investing is dividend income, which arrives regularly on its own, showing up in your brokerage account, where it's ready to be deployed into shares of stock. Don't make the mistake of thinking that dividend payers are stodgy, boring old companies. Many fast-growing tech stocks pay some kind of dividend these days, and even if they're small, they may be growing quickly. Blue chip stocks may offer fatter dividend yields -- and their shares will likely appreciate over time, too, for a nice one-two punch.

ALSO READ: How to Invest in Dividend Stocks: A Guide to Dividend Investing

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10. Take on a side gig

This is an obvious and very effective way to boost your income, allowing for more aggressive saving and investing: take on a side gig or two, for a short or long while. If you can find income-generating ideas that you enjoy, you may be able to keep it up for a long time. Even generating just $5,000 more to invest each year can make a big difference down the line.

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Two eggs sitting on a pile of cash, one labeled IRA and the other 401k.

11. Make use of IRAs and 401(k)s

Retirement accounts such as IRAs and 401(k)s are designed to help with your retirement saving, by offering tax breaks. They come in traditional and Roth varieties and can help you amass hefty sums if you contribute generously and regularly. Traditional IRAs and 401(k)s give you an up-front tax break, reducing your taxable income in the year of your contribution, while Roth accounts tax you up front but allow tax-free withdrawals in retirement.

ALSO READ: What Is an IRA and How Does It Work?

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12. Max out any 401(k) match

Your 401(k) probably offers another way to boost your retirement savings -- via an employer match. A common match will chip in 50% of whatever you contribute to your 401(k), up to 6%. So if you max that out by contributing at least 6%, your employer will kick in 3% of your income. It's often best to contribute much more than that 6%, too -- perhaps on top of contributions to IRAs.

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The word Postponed printed in red.

13. Consider delaying retirement for a few years

Here's a great strategy that you probably won't want to use: delaying retiring for a few years. Consider it, though -- because it has multiple benefits. You'll be able to sock away more money for retirement, your nest egg will have to support you for fewer years, you may be able to remain on your employer's health insurance plan longer, and you may end up beefing up your Social Security benefits in the process.

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14. Be tax smart

Being smart about taxes can help you shrink your tax bill, freeing up a lot of money for investing. For example, read up on tax deductions and credits to see if there any you can use. If you're adopting a child, for example, there's a credit for that. There are also credits related to children and education, among other things, and deductions for all kinds of things, such as charitable contributions, home office expenses, and alimony payments (for certain people). There's even a Saver's Credit worth up to $1,000, or $2,000 for married couples filing jointly. Read up on available credits and deductions and see which ones you might be able to claim.

ALSO READ: Taxes on Investments: Understanding the Basics

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Stacks of $100 dollar bills.

15. Have a smart Social Security strategy

Finally, there's Social Security. Don't just leave your benefits up to chance, figuring you'll get what you get, whenever you retire. Instead, read up on Social Security and learn about how you might increase your benefits. Delaying starting to collect your checks is one strategy, and coordinating when to collect with your spouse can also pay off well.

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Presented by Motley Fool Stock Advisor
We hear it over and over from investors, “I wish I had bought Amazon or Netflix when they were first recommended by The Motley Fool. I’d be sitting on a gold mine!" It's true, but we think these 5 other stocks are screaming buys. And you can buy them now for less than $49 a share! Click here to learn how you can grab a copy of “5 Growth Stocks Under $49” for FREE for a limited time only.

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Don't neglect your future

However you do it, make sure you're saving and investing sufficiently to amass the sum you'll need for retirement. Leaving much of your future up to chance -- perhaps by saving and investing whatever you can and hoping for the best -- can lead to disaster. Read up and have a good plan for how you'll secure a comfortable retirement.

The Motley Fool has a disclosure policy.

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