7 Ways to Save More for Retirement, Starting Now

Many people have multiple financial goals, from exploring credit card debt relief to saving up for retirement. However, if you want to find ways to save more for retirement, you need a plan. You can find good ways to save for your later years, even if you have strong financial needs now. Social Security will only replace 40% of your pre-retirement income. So it’s important to learn about retirement investments that could give you a more secure future. You can also learn to limit costly investment fees, taxes, and penalties and end up with more to live on.

Here are seven ways to start saving for retirement today.

Top Ways to Save for Retirement

These are some of the best ways to save for retirement and create a more financially secure future. 

#1 – Set a retirement savings goal

Having a goal in mind is one of the best ways to stay motivated and save for retirement. Many Americans say they’d like to retire as millionaires, but is that realistic or even necessary? Maybe—depending on your spending habits. 

Rather than deciding on an arbitrary number, ask yourself:  "How much money do I need to retire?” The answer to this question will help shape your retirement goals. You can answer it by using an online retirement calculator, or by asking a financial advisor or other trusted financial expert. You could also use a simple rule-of-thumb to save 10 times your expected salary at retirement age. 

Once you know the total amount you need to save, you can break your big goal down into small monthly goals. You'll need some data points to do that, including:

• Your age

• The age when you want to retire 

• The annual household income you'll need from savings and investments 

• The amount of your current retirement savings

• Your projected future return on investment 

The Savings Goal Calculator is a government site where you can input this information and find out how much to save each month to hit your target. 

You can play around with the numbers by adjusting your retirement age or the amount of money you contribute to your retirement each month. Then you can start working towards saving that ideal amount. 

If investing enough feels overwhelming, make it incremental. If your goal is to save $1,000 per month towards retirement, but that amount doesn’t fit the budget, start smaller. Even $100 per month for the first year is a great start, and you can add to that amount over time.

How much return on investment should I expect?

There is no way to predict how much you’ll earn over time, but you can look at past investment performance to get an idea. From 1970 to 2023, the S&P 500 averaged a 10.9% annual rate of return. The S&P 500 is a stock market index that tracks 500 leading stocks.

#2 – Reduce debt to free up money for retirement savings

Paying off your debt can free up more money for retirement savings. 

Getting rid of your debts could help you eliminate some of your monthly obligations and redirect the money toward retirement accounts. Imagine how quickly your nest egg could grow if you could take money going toward interest on debt and put it toward your future.

There are several techniques to reduce your debt and free up more money for retirement savings:

• Use the debt snowball or avalanche methods, which involve paying extra to one debt at a time. Focus on the lowest balance with the snowball method or the highest interest rate with the avalanche method.

• Consolidate your debt, which involves getting a new loan to pay off existing debt. Consolidating could make sense if the interest rate you qualify for is lower than what you currently pay.  

• Credit counseling could help you organize your finances 

• Debt settlement is the process of negotiating with your creditor to accept less than the full amount you owe but consider it payment in full. The rest is forgiven.

#3 – Contribute to a 401(k)

If you have a 401(k), as many Americans do, contribute. A 401(k) retirement account is an employer-sponsored retirement account. You can direct some of your earnings into the account before you pay taxes. That lowers your taxable income now.

Focus on how your 401(k) money is invested to make the most of it. If you have a long time until retirement, you can invest in riskier assets for higher potential rewards. If you're closer to retirement age, it’s usually advisable to favor conservative investments with lower potential growth and a lower risk of loss. The company managing your 401(k) may have someone available who can explain what high-risk and low-risk investments are, and how to apply your preferences to your account. 

At any age, it’s a good idea to contribute enough to earn your full employer match if you have one available. If your employer has a matching 401(k) program, this means that if you put your money in the account, they’ll match it with their money. Matches are usually limited. 

For example, let’s say you earn $50,000 per year and your employer has a 4% match. That means that if you contribute $2,000 to your 401(k), your employer will contribute an additional $2,000. You end up with $4,000 in the account. If you get paid every other week, you’d be contributing $77 out of each paycheck. You could contribute more, but your employer’s gift will max out at whatever their matching limit is.

Here are a few other guidelines to consider at each age.

In your 20s

Just starting out with your career and looking for ways to save for retirement? At this stage of your retirement planning, you have an advantage, because time is on your side. Even if you don’t make a ton of money right now, contributing a percentage of your income toward retirement is your best bet. You can get compound growth working for you. Time gives you the advantage of being able to invest in more aggressive funds. 

Under 40

You're most likely in the prime of your career and making a larger income. Continue to increase your 401(k) contributions as your income increases. As you make larger 401(k) pre-tax contributions, your taxable income declines.

Over 40

By now you might have little ones to consider, and perhaps you're adjusting your retirement strategy. It’s wise to sit down with a financial expert to go over your goals for when you would like to retire. Discuss whether you should transition from a more aggressive investing approach to a conservative approach to protect your savings. Factor in other large expenditures you might plan on, such as buying a bigger home or paying for college education(s).

Over 50

This is an exciting stage of your retirement journey, and perhaps the most important stage. 

While retirement may be just around the corner, there are two key factors to consider. First, don’t overlook required minimum distributions (RMDs). RMD rules require you to take mandatory withdrawals from your taxable retirement accounts when you reach age 73. Depending on how large your RMD is, you could be pushed into a higher tax bracket, which means you’ll pay more in taxes.

The second factor to consider is delaying Social Security payments. You can collect Social Security benefits as early as age 62. But your benefit check amount will be lower than if you delay your withdrawals. You can delay your payment until age 70, and the longer you delay, the bigger the checks.

#4 – Open an IRA

An individual retirement account (IRA) is one of the best ways to save for retirement. 

IRAs, like 401(k)s, offer tax advantages for retirement savings. The two you’ll want to look into are the traditional IRA and the Roth IRA. Here is a quick rundown of how they work:

Traditional IRA

A traditional IRA operates much like a 401(k). The money that goes into your account grows tax-deferred. Then when you're ready to withdraw from the account during retirement, you’re taxed.

Roth IRA

Unlike a traditional IRA, Roth IRAs don’t lower your taxable income now. You’ll pay taxes on your income, including the portion you contribute to your Roth. The benefit is that you won’t pay taxes on the earnings or when you withdraw funds. Also, Roth IRAs are not subject to RMDs. You can hold your money in a Roth IRA for as long as you wish, without penalty. If you think you'll be in a high tax bracket as a retiree, a Roth may be for you. 

#5 – Reduce fees

By now, you know it’s important to set up and diversify your retirement savings. However, one mistake many people make is forgetting to research the fees associated with accounts and investments.

Before you sign up for a new retirement account or buy a particular asset, ask about any costs you'll incur. Hefty fees could drastically impact your nest egg amount. The more fees you pay, the less of your money goes towards your retirement. Here are a few things to look for:

• Annual account management fees

• Expense ratios

• Commission fees

• Transaction fees

Usually, the fees can be found in your latest account statement. Take a close look at them so you can make an informed decision about your retirement accounts and move money if needed.

#6 – Consider a Health Savings Account

A Health Savings Account (HSA) is a tax-advantaged savings account designed to help pay for qualified medical expenses. But how does this help you save more for retirement? There are three major benefits to having an HSA:

• Contributions are tax-deductible

• Growth is tax-free

• Withdrawals are tax-free when used for qualified medical expenses.

Many employers offer health insurance plans with HSA plans, and may even contribute to your account, much like they would with a 401(k).

The catch is that you can’t contribute to an HSA unless you’re enrolled in a high deductible health plan and you’re not covered by Medicare or Medicaid. 

You can leave HSA money to grow or you can use it at any age on qualifying medical expenses. Once you hit age 65, you can make withdrawals from your HSA penalty-free, just as you would with a 401(k) and use the money for any purpose. If you don’t use the money for qualifying medical expenses, the withdrawal will be subject to taxes. 

#7 – Automate savings 

If you want to simplify your retirement savings, the easiest way to start is by automating your contributions. Many retirement apps and platforms offer automatic investing options that connect with your bank account so you don’t have to think about it.

If you decide to invest outside of a 401(k), your retirement savings will most likely come out of your monthly budget. Consider what amount you want to set aside each month toward retirement. Even if it’s a small amount, include it just as if it’s any bill that you have to pay. Then automate it. Your savings will have a chance to grow consistently, without any further stress on your part.

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Future You Wants to Be Debt-Free

When you think about your retirement future, it probably doesn’t include more debt payments. A more secure retirement starts by addressing important financial issues today, including your debt. 

If you’re struggling with debt or just not sure how you’ll break free from it, chat with one of our debt experts. Freedom Debt Relief offers a free debt evaluation and the opportunity to explore the options that might make the most sense in your situation.