5 Clever Ways To Speed Up Your Retirement Savings
Written by
Vance Cariaga
Edited by
Nick Friedman
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If you’re falling behind on your retirement savings, take heart — you’re not alone. The average American’s retirement savings is 32% lower than it should be when measured against their salary, according to a study by DollarGeek. The study also found that all age groups are behind in their retirement savings.
The good news is, there are several strategies you can use to bolster your retirement funds so you’re in a solid financial position when you retire. Here’s a look at five clever ways to speed up your retirement savings.
Invest in Annuities
One of the best and safest ways to grow your retirement savings is through an annuity.
An annuity is an insurance product that pays out a fixed amount of money in a series of payments. Some annuities provide a steady source of income for as long as you live. The main function of an annuity is to remove longevity risk for retirees, meaning they don’t have to worry about outliving their savings.
Annuities are divided into two phases — the accumulation phase, when you make contributions to the account and your funds grow, and the annuitization phase when you start receiving payments.
There are a couple of reasons to invest in annuities. First, your money is in a safe place that provides steady returns over a long period of time. And second, the money grows through the interest you earn, so it pays to find the best rates. Plus, the savings are tax-deferred, which means you don’t pay any income taxes on the annuity until you start to withdraw funds.
Put Raises and Bonuses Into Retirement Savings
When you get a pay raise or bonus at your job, consider it free money you can put away without having to think about it.
If you’ve been able to live within your means before you got the raise or bonus, you should be able to keep living without it in the future. Putting extra money from raises and bonuses into retirement savings can boost your balance in a hurry without your monthly budget taking a hit.
Don’t Bet Too Much on Individual Stocks
Some individual stocks shoot up in value and make investors a lot of money, but finding the right one is a challenge, even for experienced investors. You never know when some unforeseen event will send the stock tumbling.
Rather than betting a large percentage of your retirement savings on a single stock, spread your money around into different types of assets, such as savings accounts, funds, bonds, retirement plans and annuities. Investing in an annuity helps you avoid the risk and volatility associated with stocks and even mutual funds.
Max Out Retirement Contributions
This strategy is a no-brainer if you have an employer-sponsored retirement plan, such as a 401(k). It almost always makes sense to max out your contributions to get the biggest benefit from your retirement account.
In 2025, you can contribute up to $23,500 a year in your 401(k). If you are 50 or older, you can contribute an additional $7,500 as a catch-up contribution. If you get a matching contribution from your employer you can speed up your retirement savings even faster.
Automate Your Contributions and Deposits
If you’re like most Americans, you have a combination of retirement savings accounts that might include bank savings, a 401(k) plan and/or an IRA. Regardless of the type of account, you should make an effort to automate contributions and deposits.
Many employers offer an automated contribution-increase feature in their 401(k) plans, according to the Teachers Insurance and Annuity Association of America (TIAA). When you take advantage of this option, your contribution automatically increases each year, usually by 1%. Boosting your contribution limit by 1% a year can double your 401(k) balance in only five years.
Automatic contributions also work well with other retirement savings vehicles, such as bank savings accounts, IRAs and annuities. The bottom line is that there are plenty of ways to speed up your retirement savings if you’re feeling behind — and investing in an annuity is a great start.
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