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4 Ways to Save More, Regardless of Your Income Level

Will Healy
rich top earners riding on luxury yacht

When it comes to the wealthy and retirement savings, some people might assume that larger amounts of available funds equate to automatic retirement savings. However, a study by the Schwartz Center for Economic Policy Analysis found that around 30% of people who earn more than $80,000 per year have less than $200,000 saved for retirement.

Having a surprisingly lower amount of retirement savings can happen for a variety of reasons. The highest earners tend to stay in school longer, starting their working lives later and accumulating more student debt. They might also face expectations to buy homes, cars or other items that reflect their income. But whether a person is earning a lot or not, it’s likely they’re not saving enough; in fact, a GOBankingRates survey found that 42% of Americans will retire broke.

Learn how workers at any income level can save more for retirement.

See: Retirees Can Easily Save $8,000 More a Year — Here’s How

4 Ways Workers at Any Income Level Can Save More for Retirement

Whatever the reason, high incomes alone don’t necessarily equate to large amounts of accumulated wealth. What people of all income levels need is saving discipline to ensure they save enough to support themselves at the end of their working lives.

While workers can get there through many methods, the following four practices can help workers build the wealth required to fund a comfortable retirement.

Find Out: What a Comfortable Retirement Will Cost You in Every State

1. Put a Portion of Your Paycheck Into a 401(k)

One way to increase savings involves automating the process. Check with your employer to see if you can divert a certain percentage of your pay into a 401(k) account. This puts retirement savings on autopilot, allowing employees to save before they receive their paycheck. Moreover, employers will often match some 401(k) contributions. The most common rate is an employer matching 50 cents of every dollar, up to 6% of the paycheck.

Don’t Miss: 15 Big 401(k) Questions to Ask Your Employer

At those savings and matching rates, a person who makes $50,000 per year would contribute $3,000 over 12 months, and the employer would add $1,500 to the account. This would give the employee a 9% savings rate that only cost them 6% in theory. However, under a traditional 401(k), it could cost even less. The $375 monthly contribution (of which $250 comes from the employee’s pay) would reduce a monthly paycheck by only $166 in California, for example.

That reduction amount is because contributions to a traditional 401(k) are exempt from federal income tax until after the account holder withdraws the funds. For 2019, the IRS allows workers to put up to $19,000 per year in a 401(k).

Understandably, not all families can contribute up to the limit, and the costs to save rise if contributions exceed the threshold for matching. Still, this strategy gives workers the chance to build a significant savings rate at a relatively low cost.

Find Out: 13 Ways to Increase Your 401(k)

2. Contribute to an IRA

Some workers might not have 401(k) options. Other workers might want to have retirement savings outside of an employer-sponsored account. In cases such as this, consider contributing to an individual retirement account.

For 2019, individuals can contribute up to $6,000 per year ($7,000 if they are 50 or older) to IRAs. Single employees can contribute the maximum to both a 401(k) and an IRA in the same year. However, a couple could face some limitations if both of them participate in a retirement plan at work. Rules might also vary if you contribute to a Roth IRA, a program for low- or moderate-income families.

Employers who pay through direct deposit typically allow employees to distribute their pay across multiple accounts, giving an employee the option of participating in a payroll-deduction IRA. It also facilitates automatic contributions to a retirement account outside of the employer’s control. Though it likely wouldn’t come with matching funds, it at least gives workers an option to automatically save for retirement.

Consider: The Best IRA Accounts

3. Find Sources of Extra Income

Some workers can’t afford to save for retirement without earning more income. Thanks in part to the internet and smartphone apps, workers can benefit a number of ways to earn some side income. And savings from side income can build over time. For example, merely bringing in an additional $100 per week adds $5,200 per year in income.

People find extra funds in a variety of ways. Some sell unwanted items on sites such as eBay or Facebook Marketplace or sell products through affiliate marketing. Many others earn money by offering a service, such as tutoring, photography, blogging or social media management. Driving with a ridesharing service such as Uber or Lyft is another option.

Choosing the right source of secondary income will depend on your talent and time constraints. With a bit of time and creativity, a little extra work and income now could make for a more prosperous retirement in the years to come.

Related: Match Your Side Hustle With How Much Free Time You’ve Got

4. Take Control of Personal Spending

Another possible obstacle to retirement savings could involve control of your current income. Nearly three out of five American families don’t have a formalized budget, according to a 2016 study by U.S. Bank. But a budget can be an effective way to control spending.

Families can easily overspend in a number of ways. Many can drop a few dollars here and there on impulse buys, with purchases adding up to a significant sum of cash. Some dine out frequently, while others might buy expensive items to keep up with social peers. Overspending can leave families without savings — and sometimes with a substantial amount of credit card debt. Whatever the cause, spending too much money now could undermine your retirement later.

Learn: 10 Signs You’re Not Saving Enough for Retirement

Fortunately, consumers have numerous resources available to help, including ways to create a budget for free. Budgeting plans can help families monitor and manage monthly spending and keep consumer debt under control. Budgets can also help people set aside money for retirement or other goals.

Through a commitment to save and the support of available resources, most people can make retirement saving an achievable goal.

Jump start your retirement savings by using one of these 15 completely free, easy-to-use budget templates.

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This article originally appeared on GOBankingRates.com: 4 Ways to Save More, Regardless of Your Income Level