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3 Ways to Effortlessly Boost Retirement Savings Without Downgrading Your Lifestyle

For most people, retirement savings is important but investing more for the future can seem impossible. Saving for later can require sacrifice now, and investing for retirement is likely competing with other short-term financial goals and immediate expenses.

The good news is, there are a few ways you can save more for retirement without making any sacrifices or changing your lifestyle in a manner that's hard to sustain. Here are three of them.

Image source: Getty Images.

1. Bank your raises

Chances are good you'll get a salary increase at periodic intervals throughout your career -- either because you change jobs or because your boss offers you a pay raise. When you get this extra money, you haven't allocated the funds yet since you didn't have the money coming in before.

Rather than taking on new obligations and spending the raise, divert it directly to retirement savings instead. A 2% raise provides the opportunity to increase your retirement investment contributions by 2 percentage points. If you do this a few times over the years, eventually you'll end up saving a huge percentage of your income without making any budget cuts at all.

2. Save your "third paycheck"

If you have a job where you're paid biweekly, there are two months a year when you get a third paycheck instead of receiving two paychecks per month. Chances are, most of your bills are paid based on the two monthly paychecks since that's the norm for 10 months (and you can make sure that happens by setting up your budget that way).

When you get that third paycheck, immediately put the money into a retirement investment account. You'll end up saving over 7% of your income effortlessly if you take this approach. This is easier to do if you're investing the money in an IRA that you can transfer money to any time, rather than a 401(k) where you sign up with your employer to make regular contributions from each paycheck.

So if you don't already have an IRA, you may want to start one to put this extra contribution into. That will also allow you to diversify your retirement account options.

3. Use your tax refund

A tax refund is a windfall for most people because it's an extra few thousand dollars that's not part of your regular monthly income.

When you get your refund, contribute it to your IRA each year rather than spending it on other things. The average tax refund in 2020 was $2,827. If you invest that amount annually every year for 30 years and you earn an average 8% annual return, you'd end up with over $300,000 in your retirement account -- just from these contributions alone. And the larger your refund, the bigger the impact you'll make by investing the money the IRS sends you.

Taking any of these three steps will allow you to invest more for your future without having to cut anything from your budget. You can take advantage of them regularly. And, if you end up doing all three, you should be able to save more for your future than you ever imagined so you can enjoy your later years with plenty of money in the bank.

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