When saving for retirement, many Americans fall short. About two-thirds of non-retired adults are concerned about meeting their retirement savings goals. If you’re worried about saving for retirement or haven’t started saving yet, this guide should help get you on track regardless of your financial situation.

Investing with retirement in mind isn’t as difficult as it may seem. This step-by-step guide can help you develop a simple and realistic strategy for meeting your short- and long-term financial goals.

How to Save More for Retirement

There’s never a better time to start saving than now. Even if you started saving late or have yet to begin saving, you’re not alone. Best of all, by following a few simple steps you can increase your ability to save for retirement, meaning you can live a better life after you retire.

Consider these tips to boost your retirement savings starting today and pursue the retirement plan you envisioned – regardless of your stage of life.

1. Record Your Expenses

Recording expenses is the first and most important step when saving for retirement. This means that every coffee, meal, household item, and monthly bill should go into an expenses spreadsheet to help you track your spending. Make sure to track all your expenses, including credit card payments, and cross reference your bank statements to determine if you’re on track for your weekly, monthly, and annual spending goals.

Itemizing your expenses may seem like a lot of work, but understanding its importance will help you become more conscious of your spending habits. Further, tracking your expenses can help you stick to your budget by laying out all your income and expenses in one place.

Suppose your highest priority is to save for retirement. In that case, you could contribute your budgeted amount toward your retirement savings every month and then track your spending to figure out if you have any extra money left over to add on top of your allocated monthly amount.

2. Determine Your Financial Priorities

After recording your income and expenses, the next best tip is to write down any financial goals you may have so you can determine how much these goals will affect your saving strategy. If, for example, you plan to replace your car in the future, you could start saving for one now. However, this means that less money would go into your retirement account each month.

Finding the right balance between your short-term goals (such as a new car) and your long-term goals (such as maxing out your retirement account) is key in creating a manageable saving strategy that works for your specific situation.

Planning for retirement doesn’t necessarily mean putting aside your short-term needs. You should learn to prioritize your savings goals to give you a clearer idea of how to allocate savings.

3. Open an IRA

An IRA is one of the best ways to build your nest egg. The two main types of retirement accounts are individual retirement accounts (IRAs) and 401(k)s. Both accounts are available in traditional and Roth varieties and offer tax-advantaged growth on invested money.

  • Traditional IRA: This retirement account option may be right for you depending on your income and if you or your spouse is eligible to participate in the workplace retirement plan. Contributions made to the traditional IRA may be tax-deductible. The potential investment earnings will also grow tax-deferred until after your first withdrawals during retirement.
  • Roth IRA: This retirement account option may be the best option if you meet the phased-out modified adjusted gross limits. Contributions are not deductible as the account is funded using post-tax dollars. You get no upfront tax breaks as with the traditional IRA account. The Roth IRA payoff also comes later, and withdrawals in retirement aren’t taxed.

The primary benefit of opening an IRA is that you can deposit your savings into one (or more) of these accounts and it can grow tax-free until it’s time for you to retire. Put simply, these accounts often lead to higher tax savings when compared to normal saving or investing accounts due to the special restrictions and benefits placed on them.

For this reason, it’s critical that you save your money in a tax-advantaged account such as an IRA to ensure you maximize your savings come retirement by minimizing the amount of tax you’ll have to pay on your withdrawals.

4. Automate Savings

The “pay yourself first” phrase is widely used by financial advisors to help people choose when, how much, and where to transfer their retirement savings or split a portion of their direct deposits into their savings accounts.

Setting up regular deposits into your retirement accounts (401(k) or IRA) is the easiest way to ensure you’re saving. Automating your retirement savings guarantees you never see the funds in your spending account. Making automated monthly retirement contributions will grow your savings without having to think about it.

5. Capitalize on Flexible Spending Accounts

Leveraging a Flexible Spending Account (FSA) can also help lower your taxable income. Like a 401(k), the IRS won’t include payroll deductions contributions to your FSA or Health Savings Account (HSA) after calculating how much you owe. Taking advantage of these account deductions is an easy way to lower your overall taxed amount.

However, you’ll need a High Deductible Health Insurance plan to qualify for an HSA. An individual can only contribute a maximum amount yearly to the HSA. The HSA contribution limits for individuals and families are $3,650 and $7,300, respectively. However, FSAs don’t carry these restrictions and cover many other expenses, not just medical.

The funds from your contributions to these FSAs can increase in value without contributing as your source of income or capital gains. This can help you meet your tax-free retirement goals through the profits on these tax-advantaged accounts. You can also pay for eligible expenses using the FSA or HAS, keeping the expenses as tax-free as possible.

These factors make the FSA and HSA contributions a great way to minimize your taxable income, making them a great option to start when looking to lower your overall tax bill.

Start Now

Whatever your goal is to plan for your investment, start today. Something will always come up and warrant using your resources. Remember, saving for the future should be your primary objective and stay at the forefront of your mind and finances, regardless of what comes around.

It’s Never Too Late: Start Saving Today

The steps above should help give your retirement savings a significant kickstart. Your focus should be on finding extra money in your budget, eliminating costly debt payments, opening an IRA, and capitalizing on FSAs.

Automating these debt avoidance and smart savings habits should help you gain positive momentum. TSP Family Office works with you to create ideas on how to save more for retirement. Let us help you keep track of your tax savings and retirement plan by completing our tax savings calculator. To find out more about investing with retirement in mind, contact us at (772) 257-7888.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To the extent any of the content published may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. Consult your adviser about what is best for you. Any tax or legal information is provided for general informational purposes only; consult your tax adviser or attorney for issues regarding your specific circumstances.