10 Easy Ways to Save More for Retirement

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10 Easy Ways to Save More for Retirement The little things can add up!

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A Quick Note Before Starting The most effective ways for saving more for retirement involve lifestyle choices: finding your level of “Enough”, living near where you work and play, etc. But these are not “easy” actions to take, so they aren’t included here. On some pages, I’ll give an idea for how much extra retirement money you could save. This will assume that money saved will be invested for 25 years and return 6% after inflation—to keep these numbers in today’s dollars.

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1) Get the Maximum Match Many employers offer a “match” for participating in a workplace retirement plan—often known as a 401(k) or 403(b). The most common form is when an employer donates $0.50 for every dollar an employee does, up to 6%. This is the closest thing to “free retirement money” you’ll ever see! If you earn $75,000 per year... The “free money” you get just this year will be worth $9,650 in 25 years. If you do this every year for 25 years, this “free money” will total over $130,850. Remember, this is just the match—you didn’t have to do anything but contribute to get it!

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2) Open and Max Out a Roth IRA The money you contribute to your 401(k) is tax deductible. But when you withdraw it in retirement, you’ll be taxed. A Roth is the exact opposite: you pay taxes now, but all growth and withdrawals in retirement are tax-free Under age 50, the maximum contribution is $5,500. Older workers can contribute up to $6,500 The money that you put away this year will be worth $23,600 in 25 years. If we assume that you contribute the maximum and retire at age 67 (and contribute the elevated level for 17 years), your Roth IRA would be worth $350,000 when you retire.

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3) Open a Health Savings Account (HSA) You must have a qualified high-deductible health insurance plan. Contribution limits: $3,350 for individuals $6,650 for families Add $1,000 if over 50 The money never disappears HSA money is tax-deductible, can be invested and grow tax-free, and is dispersed tax-free for qualified medical expenses.

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4) Wait to Claim Social Security Currently, you can start receiving Social Security benefits as early as age 62, and as late as age 70. The program incentivizes waiting to collect, as those that do will see an 8% bump in yearly payments (not including COLA). Let’s assume you averaged a $75,000 salary. Here’s how annual benefits stand today, based on the age you claim benefits: Age 62: $20,220 Age 64: $23,370 Age 66: $26,960 Age 68: $31,270 Age 70: $35,590

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5) Invest with Low Fees ETFs or Index Funds Mutual funds usually charge anywhere between 0.5% and 2.0% annually to manage your funds. ETFs or Index funds often charge less than 0.5% per year. After fees and on average, you’ll get better returns with ETFs and/or index funds. Do-It-Yourself This usually requires a little more legwork on your part, but that’s why The Motley Fool exists! By slowly learning how to invest for yourself, the only fees that you’ll pay will come from the stock purchases you make through your brokerage.

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By now, you might be thinking… “You’re telling me where to save money, not how to get that extra cash!”

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That’s fair! So these next five tips will focus on easy ways to save money and put them in your retirement accounts.

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6) Save That Raise We have an awful tendency as human being to take any raise we get, and immediately increase our level of spending. While this might provide a momentary bump in happiness, research has shown that it will only be momentary. Hedonic Adaptation will cause you to continually want more. Instead, bank half of your raise immediately into savings. This simple step improves your chances for a comfortable retirement two-fold: You’ll have a bigger nest egg. You’ll require less in retirement to continue living the life you lead.

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7) Learn How to Cook Last year, for the first time, Americans spent more eating out than on food at home. The average American family with a household income of $75,000 spends $3,200 eating out If we assume that eating at home is only have as expensive as eating out, that’s $1,600 in savings. If you do this, and invest the difference, over 25 years, you’re adding $93,000 to your nest egg.

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8) Switch to Republic Wireless In late 2013, the average household smartphone bill from Verizon Wireless was $148 per month. Republic offers unlimited talk, text, and data on a 3G network for $25 per month. Assuming 2 smartphone users in a family, using Republic represents savings of almost $1,200 per year. If this difference is saved and invested over 25 years, you’ll add $70,000 to your nest egg.

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9) Cut the Cable The average monthly cable bill is $64; DirectTV is $107 per month. A subscription to Netflix costs $8 per month Broadcast TV is free and can meet most of your news/weather/sports needs. Average yearly savings from Netflix over cable or DirectTV are $670 and $1,190, respectively. Investing the difference over 25 years will increase your nest egg by $39,000 and $69,000, respectively.

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10) Get those Credit Cards Working for You Some expenses are unavoidable. When you know you aren’t overspending, put them on your credit card. If you’re willing to put a little legwork in, you can use the rewards programs on these cards to your advantage. Here’s a link to a great place to get started investigating these benefits.

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One more thing… …there’s a Social Security loophole I didn’t mention that could increase your benefits by $60,000.

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To learn more, check out: The $60,000 Social Security Bonus Most Retirees Completely Overlook