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5 Invisible Ways to Save for Retirement

Tom Sightings

It's hard to save money. It takes discipline, foresight, and self-sacrifice. Plus, it helps if you take home a nice big paycheck, which most of us don't have the luxury of doing. By the time you've paid your mortgage and utility bills, your taxes and credit card bill, and bought some gas and groceries, there's usually nothing left.

So how is a mere mortal supposed to save for retirement? We know we all have to do it, because Social Security is shaky and pensions are fading away. The only way for most people to accomplish the goal is to arrange their finances so the whole process is invisible. Behind the scenes. So you never see it, never miss it, and most importantly never spend it.

Here are five ways to save for retirement--ways you don't see, so you don't feel the pain.

1. Sign up for your company plan. This one's a no-brainer. If your company offers a 401(k) plan or other retirement system, sign up as soon as you're hired. Don't wait until after you've paid your first month's rent or put a down payment on a car. Do it now, before you get used to having that extra money in your paycheck. The idea is to skim off the top, so you never miss it. Meanwhile, check to see if your company matches your contributions. You don't want to miss out on any free money.

2. Don't leave anything behind. This almost happened to me. I had a job back in the 1970s, when I was in my 20s and the word retirement wasn't in my vocabulary. But recently I was talking to an old friend. He asked me what I'd done with that old retirement plan. I'd completely forgotten about it. I called up the human resources department, thinking they wouldn't even know who I am after all these years. But sure enough, I was on their books, with a balance of about $4,500. Not a lot. But every bit helps. I had them move the money directly into my IRA account, without passing through my own greedy hands. So if you have any old employers, check with them and make sure you're collecting all the old retirement credits you may have earned 20 or 30 years ago.

3. Buy a house. This one is not a no-brainer. But in the long run, despite periodic downturns in the housing market, buying a house and eventually paying off the mortgage is a time-tested way to force yourself to save money. It's not a short term solution, but it can be part of a long-term plan to support yourself in retirement. There's no security like living in a mortgage-free house when you get to retirement age. And there's always the option of selling and moving to a smaller place in a cheaper location to free up cash for your everyday needs.

4. Save a slice of your windfall. If you're expecting a big inheritance, that solves a lot of your retirement worries. But even a small inheritance can help with your retirement plan. Sure, take a part of the inheritance and splurge a little, or do something your loved ones might have wanted you to do. But you can certainly afford to slice off 20 or 30 percent of your inheritance and add it to your retirement fund. Do the same with a bonus you get at work, a payout you get if you're laid off, or even a pile of cash you win in Las Vegas or Atlantic City. My son recently lucked into a $2,800 pot at Foxwoods in Connecticut. I persuaded him to put $1,000 of that into his IRA, then go ahead and spend the rest, guilt free. He'll thank me 40 years from now.

5. Cultivate the non-monetary portion of your retirement. Everybody thinks they need a lot of money to retire. And by and large, that's true. But you have other resources in retirement as well, in the form of family, friends, and associations you belong to. If you have friends at home, maybe you don't feel the need to spend a lot of money on travel or entertainment. If your son or daughter can help you take care of your house and your personal needs, maybe you don't have to pay for independent living. Not everything comes down to money. Sometimes family and friends can provide a better experience at low or no cost.

Tom Sightings is a former publishing executive who was eased into early retirement in his mid-50s. He lives in the New York area and blogs at Sightings at 60, where he covers health, finance, retirement, and other concerns of baby boomers who realize that somehow they have grown up.

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