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These 7 Retirement Hacks Can Help You Save

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My friend Beth calls retirement “preferment”
She will do the things that she prefers from now on.
— @keciabee on X

That’s a fun way of thinking about retirement — a time when you’re more able to do things you want to do, as you’re no longer required to dress a certain way, adhere to a certain schedule, or work hard for much of most days.

Your retirement probably won’t be that delightful, though, unless you’ve saved and invested effectively for many years, amassing a nest egg that can help support you for decades. Here are seven strategies that can help you do so.

Someone with arms folded is smiling at the camera.

Image source: Getty Images.

1. Live below — or further below — your means

It’s important for all of us to live below our means — not spending more than we have. (Spending too much can leave you deep in debt, which will have your financial health getting worse, not better.) If you’re already living below your means, consider doing so even more, to free up more money for retirement investments.

It can make a big difference to review your spending habits and build a budget. That way, you’ll see where your money is going and can make any adjustments you want. You might even spot some unintentional cash outflows, such as unused memberships or subscriptions you’re still paying for.

2. Automate your financial life

This money hack can have you saving and investing easily with hardly any effort at all: Automate your financial life.

Millions of people can have their employer automatically direct portions of their paychecks to various accounts automatically each pay period. If that applies to you, it means you can send money into a savings account or a brokerage account. Simply participating in your 401(k) means you’ll have money automatically and regularly rerouted into investments from every paycheck.

While you’re at it, set some of your bills — even your mortgage payments — to auto-pay, as well. This way, you won’t end up missing payments.

3. Make use of tax-advantaged retirement accounts

Speaking of 401(k)s, it’s smart to make good use of them and/or IRA accounts, as they offer tax perks. Both IRAs and 401(k)s come in two main varieties — traditional and Roth.

A traditional account receives pre-tax contributions and will shrink your taxable income by the amount of your contribution. A Roth account accepts post-tax money, and if you play by the rules, all your withdrawals in retirement can be tax-free. Imagine amassing an account worth, say, $300,000 by retirement and being able to tap that tax-free. It’s a big deal.

4. Maximize 401(k) matches

If you’re participating in your employer’s 401(k) plan, find out if it matches contributions to any degree. Many companies do, and if yours does, be sure to contribute at least enough to max out that match — because it’s free money.

If your employer matches contributions up to 3% of your salary and you earn $100,000, that’s $3,000 you can get for free each year. That can add up and come in handy in retirement. (By the way — an excellent way for most people to invest for retirement within 401(k)s, IRAs, or brokerage accounts is via low-fee, broad-market index funds.)

5. Invest in dividend-paying stocks

It’s smart to hold dividend-paying stocks in your portfolio, whether you’re a few years from retirement or only in your 30s. They will regularly deliver cash to your investment accounts, and you can spend that money in retirement or buy more shares of stock.

Stocks that pay dividends can help build your wealth powerfully. Yes, they’ll pay you a dividend, but they’ll also likely increase that dividend over time. On top of that, their stock prices can appreciate, too. If you have a portfolio worth, say, $300,000, with an overall dividend yield of 3%, you’re set to collect $9,000 per year.

6. Use an HSA

If you qualify for a health savings account (HSA), consider using one. (You’ll typically need to have a high-deductible health insurance plan.) Contributions to your HSA are made on a pre-tax basis and can be used to pay for qualified healthcare-related expenses, such as medications, doctor visits, orthodontia, lab work, surgery, and much more. Better still — any money not used from the account can stay in it and grow, and you can tap it in retirement. (And if you withdraw money then for qualified healthcare expenses, it will be tax-free.)

7. Take on a side gig

A final hack to turbocharge your saving and investing for retirement is to take on a side gig — for a short or long while. If you can make an extra $200 per week for just one year, that can produce more than $10,000 that can be invested. Do it for multiple years, and you can sock away a lot more.

As you save and invest for retirement, do so with a good retirement plan in hand — and stick to your plan. Figure out how much you need to save for retirement and how you’ll do so. Don’t just rely on Social Security, because it will likely deliver less than you might expect. As of December, the average retirement benefit amounted to only about $22,000 per year.

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