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4 Ways to Boost the Amount You Save for Retirement

Author: Michael Davis

Retirement can easily last more than twenty years so that old advice that you need one million dollars to live off of is no longer applicable. After all, medical costs for the average retired couple can easily cost $220,000 alone, according to Fidelity Investments. Add housing expenses and the cost of food and entertainment, and it's easy to see why one million dollars isn't enough to live off of in retirement.

Whether you have amassed a sizeable nest egg or you have a lot of catching up to do there are ways to boost your retirement savings. From maxing out your company sponsored retirement plan contributions to opening up an IRA, here's how to do it. (For more, see: Retirement Planning: Why Plan For Retirement?)

Take Full Advantage of Company-Sponsored Retirement Plans

One of the easiest ways to start saving for your retirement is to fully take advantage of a retirement savings plan being offered by your company. Not only are these savings vehicles tax-advantaged, which means your contributions are tax-free, but companies often offer a matching component that in essence gives you free money. It may seem like a no- brainer, but far too many employees choose not to get the full match from their employer and some don't contribute to a 401 (K) at all. But setting aside even as little as $50 per pay check can go a long way in increasing the amount you save.

Open Up an IRA

Many people will make the mistake of contributing to a 401 (K) plan and nothing else. They wrongly figure that is enough to support them in retirement. But if you want to boost your savings even further, then it's a good an idea to open up an IRA. When it comes to an IRA, savers can either go with a traditional IRA or a Roth IRA. With a traditional IRA contributions are tax deductible, and you don't pay taxes on your gains until you withdraw money. With a Roth IRA, the gains from your contributions are tax-free. (For more, see Roth Vs. Traditional IRA: Which Is Right For You?)

Contribute the Maximum in Your 401 (K) and IRA

The whole idea behind company-sponsored 401 (K) plans is to get employees to put money away for retirement. The tax-free component of it is supposed to serve as an added incentive to contribute as much as possible. But most employees don't go all the way and contribute the maximum allowed, despite the benefits of doing so. If you want to enhance your retirement savings and can swing it, contributing the maximum will help a lot. For 2015, people 50 or older can contribute up to $24,000, and those under 50 can contribute up to $18,000. The same idea can be applied to an IRA as well. For 2015, savers 50 or older can contribute a maximum of $6,500. The maximum is $5,500 for people younger than 50.

Rein In Your Spending

One of the easiest ways to boost the amount of retirement savings you amassed is to rein in your spending. In this instant gratification culture, it's easy to waste money on cups of coffees, trips to the nail salon or eating out three nights a week. But if you were able to curb some of that spending and instead put it into your retirement savings account you will be better off in the long run. After all that $5.00 cup of java may be tasty but if you put the money you spend on coffee each month into your 401 (K) it will grow a lot.

The Bottom Line

Retirement can conjure feelings of fear and stress, but it doesn't have to be that way, granted you save in advance. Whether you have been savings for years or are just starting out, there are ways to boost the amount you put away for your golden years. From taking full advantage of company-sponsored retirement accounts to reining in your spending, there are a lot of ways to ensure you have enough money when you eventually walk off into the retirement sunset.

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