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Ways to Save More for Retirement

Published by: LifeWorks,

Saving as much as you can for the day you stop working makes sound economic sense. And you may have options you hadn’t considered. Depending on your goals, you may want to take a fresh look at your spending habits, revise your savings plan, or get help from a financial adviser or debt-counseling service. The most important thing is to make saving a top priority and keep looking for new ways to save until you find the way that works best for you.

The importance of saving in midlife

Saving is important at any age. But it may become especially important in midlife as retirement approaches. There are two good reasons to save more for retirement at this age.

You may be at the peak of your earning power. Most of us reach the peak of our earning power between the ages of 40 and 60. This means that in midlife we may have more money to save than we will ever have again. Even if it seems hard to save now, it may be easier than it will be later in life.

The more you save, the more secure your future is likely to be. Take a look at any savings plans you developed earlier in life. Many people underestimate how much money they will need to retire. A 2020 study by the Employee Benefit Research Institute found that only 27% of workers were very confident that they would have sufficient savings to live comfortably throughout retirement. However, less than half of the workers who participated in the study have not considered the amount of money they’ll actually need to do so. Increasing your savings now, even if it means making sacrifices, will help you achieve a more secure future.

Reducing your expenses

To save more for your retirement, you may need to reduce expenses. Look for ways to save that align with your present and future goals. Here are some tips:

Know where your money is going. You may be spending more than you think, particularly on out-of-pocket expenses, such as food, clothing, and entertainment. Track all your spending for a month by making notes of what you buy and saving and categorizing receipts. Then draw up a budget that shows your goals for spending and saving. Your bank or your organization’s assistance program may provide free budget-planning resources.

Couples should examine their spending and saving habits together. Even if one person is a spender and the other a saver, it’s important to have open and regular communication about finances, set financial priorities, and devise a budget together.

Get the lowest credit card rate possible. Check your statements or call your credit card companies to find out the interest rate (APR) you’re paying on your cards. Then shop around for cards with a lower APR. Some companies will lower your APR by several points if you call to request it or may offer incentives to keep your business. You can find information about credit card interest rates at the website Bankrate.

Pay off your credit card debt. Debt is costly. Make it a top priority to pay off credit card debt. Pay your credit card bills faithfully each month, and try to pay more than the minimum due. Work to eliminate the debt starting with either the card that has the smallest balance or the one with the highest interest rate. Then move on to the one with the next lowest balance or highest rate, and so on. If you have trouble paying the minimums, ask if the company will help by, for example, suspending your interest payments for a few months. Get into the habit of paying off your cards in full each month so you don’t have debt in the future.

Use cash instead of credit cards. Using cash or a debit card will prevent you from spending money you don’t have.

Consider getting budget or debt counseling. If you have so much debt that you can’t get it under control through your own efforts, you may want to get in touch with the National Foundation for Credit Counseling, a nonprofit organization that provides free or low-cost budget- and debt-counseling services and helps with setting up debt-repayment plans. Your assistance program may also provide budget- and debt-counseling resources.

Cut back on eating out and takeout meals. You might save hundreds or thousands a year by cooking most dinners at home and bringing lunch to work.

Take advantage of discounts for people your age. You don’t have to be 65 to qualify for many discounts. If you’re over 50 and belong to AARP, you can get discounts on hotels, insurance, and more. Don’t hesitate to ask businesses and merchants whether they offer senior discounts on shopping, dining, travel, and more.

Save on prescription drug costs. Ask your health care provider if you could substitute a generic medication for a brand-name drug. For medications you take regularly, see if your health plan lets you order 90-day supplies by mail. Or shop around for the best prices at pharmacies. And find out if you could save still more by getting a prescription drug discount card.

Review your insurance policies. Think about whether it would make sense to have higher deductibles on your car, homeowners, or other insurance. If so, you might be able to save hundreds of dollars a year on your premiums.

Cut back on shopping. Avoid the temptation to shop until you’ve paid off your debt or met your goals for reducing your expenses. Consider joining a wholesale club like Sam’s Club or Costco.

Saving more for the future

The best way to save more for retirement depends on your needs and goals. What’s important is to put aside as much money as possible into savings programs or plans, month in and month out, until your retirement. Choose the plan that’s right for you. Here are some options:

401(k) retirement savings programs

A 401(k) plan is a retirement savings program established by your employer that lets you set aside a percentage of your pay. The money you set aside—deducted before taxes or after-tax with a Roth 401(k)—is placed in a professionally managed plan. Within that plan, you can choose where to invest your 401(k) money. Many employers even pay an additional “company match” into each participating employee’s 401(k) account. The money in your 401(k) grows, tax-deferred. There are limits to the amount you can contribute; however, after age 50 you can contribute even more. If you’re a public sector employee, such as a public school teacher, the equivalent program is a 403(b).

Individual Retirement Accounts (IRAs)

There are stipulations to consider when investing in these accounts but here is a brief summary of how IRAs work:

  • A traditional IRA is a personal retirement savings account that gives you tax advantages. Contributions to this investment fund may be either partially or entirely tax-deductible. IRA investment earnings won’t be taxed until you withdraw them. There are limits to the amount you can contribute each year but if you are 50 or older at the end of a tax year, you may contribute an extra “catch-up” amount.
  • A Roth IRA is a personal savings account that also gives you tax advantages for saving for retirement. It works like a regular IRA except that contributions are not tax-deductible. They are not taken from pre-tax income, so you can withdraw your contributions, tax-free, at any time within certain limits.


Pensions are retirement plans set up by an employer for employees. The employer usually makes all the contributions to the plan. Employees receive money from the plan in regular installments after they retire. Few private companies offer pensions today, but working for one can boost your retirement income.

Savings accounts and money market accounts

Traditional savings accounts pay a fixed, low rate of interest, and the amount required to open a savings account is usually very low. Money market accounts require a higher minimum balance and pay a higher interest rate. Interest from these kinds of accounts is not tax-deferred. Make sure that your deposit is insured by the FDIC.

Certificates of deposit (CDs)

Certificates of deposit are accounts that typically pay slightly more interest because you agree to leave your money on deposit for a fixed period, which may range from one month to five years or longer. Usually there is a penalty fee if you withdraw your money early. The interest earned on CDs is not tax-deferred. Look for the best interest rate and make sure your deposit is insured by the FDIC.


You can find out if investing through stocks, bonds, mutual funds, and annuities would be right for you by doing your own research or by talking with a financial adviser. You can find a certified financial planner through the Financial Planning Association. If you have only a small amount to save, a financial planner may suggest a type of brokerage account that lets you set up an investment plan by making regular investments of relatively small amounts, such as $100.

Revising your savings plan as you get older

Continue reviewing your savings plan. Most experts suggest that you do this at least once a year. You may want to review your plan at the end of the calendar year or when you do your taxes. It’s also a good idea to take a fresh look at your savings plan if you:

  • get a raise, bonus, inheritance, tax refund, or another source of income
  • finish paying for a house, car, or child’s education
  • realize that you may need to provide financial support for an aging parent
  • are thinking about retiring early, reducing your hours, or working part-time
  • are facing changes in the economy, such as higher interest rates

Keep looking for new ways to save. Many people retire sooner than they had planned or face unexpected expenses after they stop working. The best way to be prepared is to make a habit of saving as much as you can all through life.

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