4 Painless Ways to Save for Retirement

These strategies will boost your savings with little effort.


When gas prices rise, we often cope by driving less. Doing so will seem like a sacrifice at first, but some creative planning coupled with a few slight changes to our driving habits is generally enough to save us a few dollars. Most people can cut spending if they really have to, and reducing your expenses is often one of the most effective ways to save more for retirement. Here are four ways that you can spend less and ultimately save more for retirement.

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Pay yourself first. Transferring money into your savings right away is a great trick to keep yourself from spending money you could be investing and growing. Schedule the money to move to your savings the day your paycheck hits your checking account. If you want to take this up a notch, talk to your accounting department to see if they can deposit the check directly into your savings account, and then you can transfer a set amount to your checking account each payment cycle. The difference is subtle, but the more complicated it is to spend money, the less you will end up spending.

Set up a payroll deduction to your 401(k). One of the best features of a 401(k) is that deposits are automatically taken out of each paycheck. The fact that you don't even get to touch the money is one of the best ways to save, because if you don't see it, you can't use it.

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Use a Roth IRA instead of a traditional IRA. One of the advantages of a Roth IRA versus a traditional IRA is that money in the Roth is already taxed. Therefore, all the money you deposit in a Roth IRA will be available for spending in retirement. This isn’t the case with a traditional IRA. Many people forget that their retirement assets in traditional IRAs and 401(k)s will be taxed as regular income before they can touch it.

Pay off your mortgage. When you receive a big tax refund, bonus, or other windfall of cash, should you make extra mortgage payments or invest this windfall of cash? This always sparks a debate, especially now when mortgage rates are at historic lows. Yes, it's true that you can probably invest and get a better return, but paying off the mortgage will help you to better control your spending.

This is all psychological, of course, but many people will feel wealthier with a $300,000 investment portfolio while owing a $250,000 mortgage versus being debt free and having $50,000 to invest. Those who invest a windfall may end up spending a bit more when times are good than they otherwise would have because they end up feeling a little wealthier than if they put their payment towards the mortgage. Therefore, I generally advise people to pay off their mortgage first with extra cash unless they are already well on their way to financial freedom.

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Feeling like you can't afford something is often the most effective way to not make that purchase. We are very adaptable, especially when the changes don’t necessary mean a life that's worse, and will learn to live within a budget that prioritizes retirement savings. A frugal life might even be more fulfilling, and definitely life changing by the time we reach retirement.

David Ning runs MoneyNing, a personal finance site aimed at helping others change their habits for a better financial future. He suggests that everyone to sign up for an online savings account to get more out of our hard earned money.