31 Best Ways to Save for Retirement

No matter when you start or where you are, these tips on how to save for retirement can help make your golden years platinum.

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Think of a Number

Stacks of $100 bills stacked on top of each other

So how much money do you need to retire comfortably, anyway? We say that you should aim for eight times whatever your final salary is. The important thing is to take the guesswork out of how much you'll ultimately end up with. That way, there are no nasty surprises, and you can accelerate your savings rate should you need to. Do that by determining a number, then building your spending and savings plan around that.

Start Early

Man holding a piggy bank

Unless you've managed to master time travel, this tip will come as cold comfort if you're beyond your salad days. Getting a jump on saving for retirement is just about the best piece of advice there is, however. And although many people on starting salaries would laugh at the idea that they can spare anything for retirement, the fact is that the longer you have before clocking out once and for all, the less you'll have to sock away per annum. For example, assuming an annual return of 7% after fees, you'd have a million in your retirement fund by the time you hit 65 if you saved $4,830 annually starting at the age of 25. If you wait until you're 40 to save for retirement, you'll have to stash away more than $15,000 per year to get the same result. Speaking of the big 4-0, it's the new 20! To make the most of every day, don't miss this amazing list of the 40 Things You Should Do in Your 40s!

But if you didn't, all's not lost

Couple sitting behind a piggy bank placing a coin inside

The fact that young folks aren't eager to throw their hard-earned cash at a secure dotage isn't lost on Uncle Sam. The U.S. government encourages workers 50 and older to save more than younger employees by offering catch-up contributions for retirement plans. It's a chance for johnny-save-latelies to get back on track.

Invent your future with a pro

people looking at graphs on tablet

Don't delay sitting down with a financial planner and start building an investment strategy to generate dividends that can't be matched by a simple savings or money market account. That way you can spend the rest of your time enjoying these incredible 50 Things You Must Do Before You Die!

Take Care of Consumer Debt Once and For All

man taking a credit card out of his jacket pocket

The credit card industry exists because people want things sooner than they can save up to buy them outright. The debt that ensues is wasteful, expensive and one of the biggest obstacles if you need to catch up and contribute to your retirement. Get out of the quagmire by first paying off your highest interest balances. As each card gets paid off, use the freed-up moolah to accelerate the payoff of the remaining cards. While you're doing this, commit to never spending more in a month than you can afford so you don't accumulate new debt. (See #3.) Never settle for making minimum payments on credit cards — that makes compound interest work against you instead of for you.

Remember your ABCs: Always be cost-cutting

Savings jars with 4 different labels

What's a couple dollars here and a couple dollars there? you may think as you thoughtlessly buy cheap conveniences on Amazon. You'll be shocked to discover that $5 saved at age 40 can compound to more than $1,000 by the time you're in your 80s. Small differences in spending today can make a big difference in your retirement savings tomorrow.

Get a raise, then ignore it

man with open arms looking at sky

Generally, the more money people earn, the more they spend. That usually means folks will get a better car and a nicer home with nicer things to put in it, but that doesn't dramatically improve their financial security. Smart savers control spending by automatically depositing all raises and bonuses directly into savings accounts, where they can earn more income. You'll feel a weight lifted, having that security—and while you're at it, turbocharge your happiness with these 25 Ways to Be Happier Now!

Switch employers

man thinking with a job search bar above his head

It may be in your interest to find an employer with pension benefits. (Some are out there.) If you can finagle a similar salary while simultaneously qualifying for a pension, you're golden.

Select low-cost investments

man writing on a graph pasted to wall

Fees incurred through your 401(k) plan don't sound like much, but over time, they can dramatically slow the growth rate of your money. Assuming a 7 percent annual return and fees and expenses of 0.5 percent, a 401(k) contribution of about $7,795 per year over 35 years will get you to $1 million. But if your fees are 1 percent higher (1.5 percent total), you'll need to save $1,895 extra per year to make up for them.

Strike a match

a match lighting a row of matches

A 401(k) match will make you a millionaire much faster than going it alone. But a word to the wise: Pay attention to your employer's vesting schedule for the retirement plan. Until you're fully invested in the plan, you may not get to keep employer contributions to your retirement account. In some cases, you might need to remain with an employer for five or six years until you can keep your match.

Mind the gaps with an IRA or similar

Paper with IRA written on it on top of fanned out $100 bills

Chances are, at some point in your career you'll change your employer, get laid off, stop working because of a serious illness, or even take some time out of the workforce. Any of these changes could interrupt the rate at which you're socking money away for the golden years. To keep your retirement plan on track in the face of times like these, you may need to save in an IRA or a taxable investment account until you become eligible for a new retirement plan at work.

Leave it in

hammer shattering piggy bank

An early withdrawal can be disastrous to your dreams of having a million bucks in your war chest by the time you retire. Whenever you withdraw money from a 401(k) account, you'll have to pay income tax on the amount withdrawn. And generally, those who withdraw money before they turn 59½ are also charged a 10 percent early-withdrawal penalty. Ouch! Keeping an emergency fund outside of your retirement account is a much better plan for a financial cushion.

Find the right balance of safety and growth

person pointing at clouds shaped into icons

Chances are that your 401(k) portfolio probably won't outperform the stock market year after year. In fact, smart savers should simply aim to capture the average growth of the stock market. In Stocks for the Long Run, author Jeremy Siegel's research showed that for the period between 1926 and 2006, stocks produced an average real return of 6.8%. "Real return" means return after inflation. Before factoring inflation, stocks returned about 10% per year. Once you start to accumulate funds, protect it with a broad investment strategy that includes stocks, bonds, and cash. That's just one of the 10 Ways to Sleep Better Tonight — Guaranteed!

Ratchet up what you save

see-through piggy bank with gold coins inside

People say that saving between 10 and 15 percent of your yearly income for retirement is a good idea. Others say that if you're getting a late start, you may need to do a little better than that. Challenge yourself to stash a fifth of your take-home pay. You may find that rising to the occasion is less painful than you'd previously thought.

Make your savings account as real a monthly expense as anything else

budget report with calculator

If you set up an automatic payment to your retirement fund, you'll be taking a huge step toward accumulating your pile, and you'll feel less pain in the process. It's a little bit of the "out of sight, out of mind" psychology: You won't miss it if you never see it, and the slightly reduced pay will be offset by the great feeling of knowing your retirement savings are headed in the right direction.

Empty nest? Full 401k!

empty birds nest on wooden table

Kids are pricey. Once they fly the coop, you'll no doubt notice that you have a lot more money to play with. Resist buying the timeshare, the RV, the commemorative silver dollars or a palette of Blu Blockers and instead take advantage of your newfound ability to stash money for retirement. "Usually people don't have a lot of money when the children are in school," says Harold Anderson, a certified financial planner and president of Parkshore Wealth Management in Roseville, Calif. "You usually find that the period of time in your 50s and your mid-60s is when you're really putting away a lot of money." And don't be afraid to spend some of that extra cash on these 9 of the World's Greatest Beach Vacations!

Downsize Your Home

a pair of hands holding a small model home

Sure, the guest rooms are nice when friends and relatives are in town. Yes, the lawn looks good during those few months when it's not covered in fallen leaves or three feet of rotting snow. But you might want to take a hard look at how a large home is draining your retirement fund. Downsizing is a double-win for your savings. Why? Because you increase investment income while at the same time reducing or eliminating certain expenses such as your mortgage payments, utilities, maintenance, property taxes, insurance, and more. And there's a perfectly nice hotel just down the street for when visitors come to town.

Pack up and move out

couple sitting on floor drinking wine with open and unopen moving boxes

Perhaps you're living in an area where property values have soared, maybe because of a new transit link that makes morning commutes shorter. Well, guess what: you don't have to strap-hang anymore, so why not realize the increased value in your home by relocating to a lower-cost housing market? Price differentials between some markets can be enough to fund a significant portion of some people's retirement needs. $200,000 of equity invested at 7% produces $14,000 per year in income, for example. Start by considering these 20 Cities to Visit Before You Die!


farm town

What's an egagtrom? It's mortgage in reverse, and another strategy for getting at the equity in your home without either downsizing or moving to a lower-cost area. You stay in your own home, which is good if that's where you want to be. Reverse mortgages often come with high closing costs and high interest rates that will also reduce the value of your estate. But in the right circumstances, it may be worth looking at.

Keep it in the family

family holding hands up sitting on beach

Yet another option for people who are house-rich and cash-poor for retirement is a sale-leaseback arrangement. Typically, this involves selling your home to your kids and renting it back. Why? Ideally, the homeowner tax deductions go to the children (who are ideally in a higher tax bracket), and parents gain some spending money while staying put. There are some legal pitfalls with this route, so be sure to get solid legal advice that includes professional contracts and market rents so you don't run afoul of the law.

Recover lost money from your home or business

woman putting room for rent sign on wall

Listen! Can you hear that sucking sound? That's your retirement money being sucked out of the space in your home that you could rent out for cash. Take a good look at all the space you're currently paying for, and make them work for you. You may find that what you recover will compound into a small fortune by the time you hang it up for good. Get some inspiration fro The Most Ashtonishing AirBNBs in the World!

Convert other assets

Open mini treasure chest

It's not just wasted space that could be converted into retirement savings. Think about all the goods you've accumulated over the years that could be accumulating interest but are instead just accumulating dust (and making it harder and harder to get into the damn crawl space). We're talking antiques, jewelry, collectibles, and other valuable items that could be converted into productive investments. The boat you barely use, the cabin you seldom visit, the baseball card collection that you've forgotten about — all of this stuff is sitting there waiting to make your goal of retiring with peace of mind that much easier.

Increase your relative wealth

group of friends toasting with beers

$1.2 million will get you a pokey one-bedroom apartment in downtown Manhattan, a Cribs-worthy manse elsewhere in the country, or a beachfront palace in another part of the world. Point is, if you have a thirst for new beginnings, you can become many times richer than you are by spending time in a place where housing costs, living expenses and health care cost a fraction of what they do Stateside. Suddenly, you'll have ample funds with which to retire.

Eliminate obsolete insurance

man holding insurance claim towards camera

We buy insurance to protect us against losses we can't afford to take. Chances are, the insurance you purchased 10 or 20 years ago may now be more than you need. Look at reducing or eliminating coverage where you can, and use the money you save to put toward your retirement.

Drive a used car

Couple looking into a car at car dealer

You're a big boy, and you've earned your stripes. You certainly don't need to impress your chucklehead buddies with a fancy ride. Drive a used vehicle for pennies on the dollar after it's been driven off the lot, and you'll immediately become thousands of bucks richer. This strategy alone add thousands to your retirement plan every time you apply it.


Man working at night in office

Pursue a moonlighting income in a field you're passionate about and would enjoy even during retirement. Use all the fun money produced for boosting your retirement savings. And be the best-dressed man in an office thanks to these 25 New Rules of Office Style!

Know that they may, in fact, take it with them

older couple sitting on chairs by the beach

If your folks' asset base (which could be your inheritance) is at risk — the possibility of long-term care expenses and nursing home bills could eating up your legacy — think about stepping in to fund their long-term care insurance and/or life insurance premiums. You'll be doing something good for their golden years now and potentially doing something good for your golden years in the years to come.

Maximize retirement plan contributions

stacks of coins on a graph on table

Americans contribute an average of 5-7% to their 401(k) plan, according to a study by the American Benefits Institute. That's far less than the maximum allowed by law. This should be a no-brainer for anybody saving for retirement, but let me say it anyway: Maximize tax deferred contributions!

Have multiple savings plans

stacks of money in ascending order

Talk to a financial advisor about your ability to save your money in more than one retirement plan at the same time as contributions to different savings plans are no longer interdependent. If you can afford it, maxing out more than one tax-deferred plan is an excellent way to catch up on retirement savings. And with all that cash saved, spend the rest using this list of the 40 Best Ways to Spend Money in Retirement!

Put yourself first

Man with sunglasses laughing

To help others, we must first help ourselves. It sounds harsh, but this means putting retirement savings before other monetary responsibilities, even your kids' college tuition. Why? Well, as fiendishly expensive as college has become, your kids have far more options to pay for their education (scholarships, loans, work-study) than you do in paying for your retirement. So you do you, then help them.

Work longer that you'd planned

hipster with a wooden pipe

There was cold comfort at the beginning of this list, and unless you really love the work you do, this last tip could smart a bit too. Working longer and retiring later will allow you to earn more money and delay collection of your Social Security benefits. That would mean a big financial boost simply because the longer you wait to collect those benefits, the more you'll get. For example, if you begin to take Social Security at 70, as opposed to 62, you'll be receiving a monthly payment that's 76 percent higher. That could add up to lifetime gains of $250,000 or more, according to Forbes. And hey, you don't have to be "the old guy at the office" if you read these essential 10 Ways to Look 10 Years Younger!

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