Americans Need to Save More for Retirement: Here's How to Do It

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Given how lousy most Americans are at saving money, just about everybody could benefit from having more retirement savings -- particularly the female of the species. Women live longer than men, so we're likely to have longer retirements -- meaning the money has to stretch a little further on average for women than for men. Yet because the average salary for women is lower than the average for men, it's difficult to save even as much as our male counterparts do.

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Difficult, but not impossible. Consider these tips for supersizing your savings -- whether you're a man or a woman.

Set a savings goal

Take the time to calculate what your likely expenses will be in retirement (taking into consideration the plans and activities you have in mind), then use the estimated expenses to figure out how much money you'll need to have by the day you retire. But if you just don't want to spend the time and energy it takes to build a really realistic retirement budget, there are some quick and dirty estimation tools that you can use to come up with a number instead.

Many experts suggest contributing 15% of your income to your retirement accounts. Assuming you're still at least a couple of decades away from retirement, that savings rate may suffice. However, if your last day of work is less than 20 years away, then you should save more aggressively.

Another option is to pick a savings goal based on the average retiree's needs. One study estimated that the average retirement costs $738,400 -- but remember, that's the average cost in today's dollars. If you have many years to go before retirement, inflation could increase that number drastically.

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The best way to produce a savings goal is to factor in your expected costs, income, and lifespan. However, even an arbitrary goal is better than nothing. Want to aim for a high, round number like $1 million? Go for it. After all, you'll never reach your destination if you don't know where you're going.

Pick a contribution amount

Once you have a savings goal, you need to figure out exactly how much you need to stash in your retirement accounts each month to meet that goal. If you picked a percentage, such as 15%, just multiply your monthly income by that percentage to get the exact number you need to save. If you have a 401(k) plan, you may be able to skip this step, as many 401(k) trustees let you automatically defer a percentage of your pre-tax salary.

If you picked an ultimate savings goal, such as $1 million, use a retirement calculator to determine how much you need to save each month to get there.

Find the money

Now comes the really tricky part: carving enough room in your budget to save that magic amount that will get you the fully funded retirement of your dreams. If right now you're spending everything that you earn every month, you have two options. Option number one is to increase your monthly income and use the extra money to fund your retirement savings. Option number two is to cut your expenses and use the money you save to fund your retirement savings. Ideally, you can do a little of both.

Make your investments do the work for you

If you've spent any quality time with a retirement calculator, you've probably noticed that bumping up the "expected returns" field has an enormous impact on how much money you end up with. The better the returns you can get on the investments in your IRA or 401(k), the less you need to save to get the results you want. Of course, you have no control over the stock market, the economy, or whether a meteor crashes through the roof of the New York Stock Exchange. What you can control is the investments you choose to spend your hard-earned money to acquire. If you pick out the right types of investments based on how long you have to go before retirement and your personal risk tolerance levels, you maximize your chances of getting high returns on those investments. And diversifying wisely can both increase your returns and reduce your risks.

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