Regardless of whether you're 25 or 55, saving for retirement is a wise financial strategy. Everyone will face retirement at some point, either by choice or necessity. Whether you are on track for retirement savings or need to play catch up, or you're a financial advisor who wants to give clients a leg up on preparing for their later years, these eight essential tips for retirement savings will put more money in your account.

(Also see our tutorial: Retirement Planning Basics.)

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8 Essential Tips For Retirement Saving

1. Grab the 401(k) or 403(b) Company Match

If your workplace offers a retirement plan and a company match, you should contribute up to the amount that the company kicks in. Let’s say that José’s company contributes up to 5% of his salary and matches every dollar he puts into his workplace retirement account. If José doesn’t add his 5% to the pool, he misses out on free money. José earns $50,000 per year. By investing at least $2,500 into his 401(k), he automatically gets a $2,500 bonus from his employer, along with important tax benefits.

For the greatest retirement benefit, contribute up to the maximum amount allowed by law to your retirement savings plans. Start now for the greatest financial benefit.

2. Claim Double Retirement Plan Contributions

A little-known retirement savings opportunity allows some teachers, healthcare workers, public sector, and nonprofit employees the opportunity to contribute twice as much to retirement plans. These workers can add $19,500, the maximum amount for 2020 ($19,000 for 2019) to 403(b) or 457 retirement plan accounts. That’s a total tax-advantaged savings amount of $39,000 in one year.

3. File for Uncle Sam’s Retirement Savings Credit

If you are a middle- or lower-income taxpayer, you may claim a tax credit for up to 50% of your retirement plan contribution. If you are married and filing jointly with an adjusted gross income of $65,000 or less (2020), and you contribute to a qualified retirement plan, you may be eligible for a tax credit. The income limits for heads of household is $48,750, for single filers is $32,500, and for married persons filing separately is $32,000.

The maximum credit is $2,000 for married couples filing jointly and $1,000 for single filers (applied against the maximum contribution amounts: $4,000 for married couples filing jointly and $2,000 for single filers).

4. Use the Backdoor Roth IRA to Increase Savings

For 2020, the adjusted gross income (AGI) phase-out contribution range for Roth IRAs for married couples filing jointly is $196,000 to $206,000 and for single taxpayers and heads of households is $124,000 to $139,000. If your current income is too high and makes you ineligible to contribute to a Roth IRA, there’s another way in. First, contribute to a traditional IRA. There is no income ceiling for contributions to a non-deductible traditional IRA, although there is a limit to what can be contributed (maximum: $6,000 or $7,000 if age 50+, or the taxpayer's total taxable compensation if the compensation was less than the stated dollar amounts). After the funds clear, convert the traditional IRA to a Roth IRA. That way the funds can compound for the future and be withdrawn tax-free, as long as you meet the withdrawal guidelines.

“I have high-income clients who open traditional IRAs and make non-deductible contributions on an automatic monthly basis to the maximum allowable amount. At the end of each quarter, we submit a full conversion request so that the entire IRA balance gets converted to their Roth account. By converting quarterly, there is not a lot of time for taxable gains to accrue in the traditional IRA. So the tax implication of the conversion is minimal for the client. And, they’re saving additional retirement dollars to compound and withdraw tax-free later on,” says Alyssa Marks, lead advisor, CMFS Group, Inc., Morton, Ill.

5. Retire in the Right State

Florida, Tennessee, South Dakota, Wyoming, Texas, Nevada, and Washington: These states boast “no state income taxes.” Be aware that New Hampshire and Tennessee do tax dividends and interest. Fortunately for retirees, most states don’t tax Social Security. Before packing up and moving, evaluate all of the taxes in your proposed new home state.

6. Self-Employed Retirement Savings

Even if it’s just a side job, self-employment income allows you to contribute to a solo 401(k) and a Simplified Employee Pension (SEP) plan. You can contribute up to 25% of your net self-employment income, up to $57,000 (the 2020 limit; in 2019, it’s $56,000) with a SEP. If you’re under age 50, you can invest up to $19,500 (2020; 19,000 in 2019) in a Solo 401(k) in the role of employee. The catch-up contribution for employees age 50 or older is $6,500 ($6,000 for 2019). There’s also an opportunity to contribute more to the solo 401(k) in the role of the employer.

7. The Health Savings Account

With healthcare costs growing and the proliferation of high deductible health plans, the health savings account (HSA) is a golden retirement planning opportunity. This tool can not only be used to pay for healthcare expenses but also to squirrel away additional funds for retirement.

The individual or employer contributes up to $7,100 for a family or $3,550 for an individual ($7,000 and $3,500, respectively for 2019). The contributions are 100% tax-deductible, and funds unused for medical expenses may continue to be invested and grow over time. Those over age 55 can sock away an additional $1,000 per year.

“Health savings accounts are the only savings vehicle that is tax-deductible on the way in and potentially tax-free on the withdrawal if used for qualified medical expenses. These accounts should be funded to the maximum since participants are almost certain to have some out-of-pocket medical expenses currently or in the future,” says Robert M. Troyano, CPA, CFP®, founder and managing partner at RMT Wealth Management in Saddle Brook, N.J.

What’s more, “once you reach age 65, any assets inside the HSA account may potentially be used for anything, not just healthcare-related expenses,” says Mark Hebner, founder and president of Index Fund Advisors, Inc., in Irvine, Calif., and author of “Index Funds: The 12-Step Recovery Program for Active Investors.”

8. Benefit From Getting Older

If you’re over age 50, the tax system is your friend. Retirement plan contribution limits are raised, giving the older investor a chance to accelerate their retirement savings. You’re allowed to increase contributions to both traditional and Roth IRAs to $7,000 for 2020.

Finally, your government rewards you with the opportunity to contribute an additional $6,500 to the employer-sponsored retirement plan (e.g., 401(k), 403(b), 457) for a maximum amount of $26,000 ($19,500 maximum salary deferral amount + $6,500 catch-up contribution).

The Bottom Line

Automate your retirement savings and have the money transferred from your paycheck to the retirement account(s). The cash you can’t get your hands on is more money for your retirement nest egg. Take advantage of the tax-saving retirement opportunities for which you qualify. By starting now and maximizing your retirement account dollars, you secure your financial future. (For a list of retirement savings tips from the Internal Revenue Service, click here.)