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Tips for Setting Aside Money for Retirement

Let’s face it: saving for retirement is tough. It can be downright painful when you have to bypass vacations, new furniture, or evenings out with your friends. So it’s no wonder that most Americans don’t have nearly enough saved for retirement, and many have nothing saved at all.

Ultimately, retirement savings is a fairly simple equation: the more you put away, and the earlier you begin putting it away, the more you’ll have saved up. Small contributions add up over time, so here’s how you can put away as much as possible.

Have Contributions Automatically Deducted

You’ll feel less like you’re losing money if you never see the money you put toward retirement. When you’re not transferring money yourself, you won’t be tempted to spend it elsewhere. Schedule automatic deductions to your 401(k) from your paycheck. If you’re self-employed, set up a monthly or weekly transfer from your savings account so you’re not tempted to skimp on saving.

Max Out Employer Matching

Employer matching of retirement contributions is literally free money. You can potentially double your retirement savings if you play your cards right, so do whatever you need to to max out employer matching retirement contributions. And remember that employer matching doesn’t count toward the maximum annual contribution toward a 401(k), adding to the value of this free money.

Spend a Little, Save a Little

No one ever said you have to give up spending altogether to save for retirement. Try mirroring your spending with a small savings contribution for every purchase. After all, if you can afford to spend, you can afford to save. Automatic saving programs such as Wells Fargo’s Way to Save are a great option. These programs transfer a small amount to a savings account for each purchase you make—usually a dollar, or sometimes just the change as with Bank of America’s Keep the Change.

The amounts are small, but they add up. At the end of the year, transfer the money to a higher yield account. It’s a modern-day version of raiding the piggy bank and scouring the couch for loose change.

Don’t Waste Money on Debt Payments

Paying interest on loans and credit cards every month is like lighting cash on fire. You’ll have more money to save if you can quickly pay down your debts. To pay off debt more rapidly, try switching to low or no-interest credit cards, making twice-monthly payments, and always paying more than the minimum monthly payment.

Clear the Clutter

No one needs everything they own. If you have collector’s items, unused clothing, jewelry you no longer wear, or other items clogging your closets, consider selling them on consignment, at a yard sale, or at an antique mall. The money can then go to a retirement account, clearing space in your home and your budget.

Don’t Forget About Your Biggest Investment

Your physical property is an important retirement investment, since selling the things you own can help you if you run into a cash shortage. Most retirees’ biggest investment is their home. Your home can be an untapped source of cash if you opt to sell it or rent out a room. And once you reach the age of 62, you can tap into your home’s equity via a reverse mortgage. A reverse mortgage offers cash that you won’t have to repay—so long as you follow the terms of the mortgage—for as long as you remain in your home. You can use the money as you see fit, including to renovate your home, fund a vacation, pay down debt, or even transfer to a high-yield retirement account.