Just about everyone hopes to retire one day, but many people aren’t quite sure how to get there. Amassing enough money to retire is a rather daunting task, especially when you’re just starting out. But developing a plan and taking advantage of every savings opportunity can help ease the stress and set you on a path to financial freedom in your golden years.

Here are seven tips to consider when trying to maximize your retirement savings.

1. Start saving today

Getting started as soon as you can will have a big impact on your retirement savings over time. Because retirement is decades away for many people, the money you save today will have more time to compound and grow and will be worth more during retirement than the money you save later on.

Even if you don’t have a lot to save right now, remember that starting small can still make a mark. If you start investing $75 per month at age 25, you’ll have more at age 65 than if you wait and start investing $100 per month at age 35. That extra time to compound could be the difference between retirement and having to work a few more years.

2. Contribute to your 401(k) or workplace retirement plan

If your employer offers a retirement plan such as a 401(k), that can be a great place to start saving. In a traditional 401(k) plan, contributions are made with pretax dollars, which means you won’t pay federal income taxes on those contributions. Once invested, your money will be allowed to grow tax-deferred until you start making withdrawals during retirement.

Some employers also offer the option to participate in a Roth 401(k) plan, which requires you to make contributions with after-tax dollars. This might sound like a bad deal at first, but you won’t pay taxes at all on withdrawals during retirement with a Roth plan. This option makes sense for many workers, especially those with low current tax rates who will likely be in a higher bracket once they start making withdrawals.

Employees can contribute up to $22,500 to 401(k) plans in 2023, while those over age 50 can contribute an additional $7,500 for a total of $30,000. The contribution limit will increase to $23,000 in 2024, or $30,500 for those over age 50.

The investment options in workplace retirement plans can be somewhat limited, but pay special attention to the expense ratios for any funds you’re considering. Index funds typically have low costs and give investors access to a diversified portfolio of securities.

3. Use your employer’s company match

Another bonus of workplace plans is the employer match. Many employers offer to match a portion of the employee’s contribution to their retirement plan and this benefit is something everyone should try to use. Experts consider the match “free money.”

Here’s how it works. An employer may offer to match 100 percent of your contributions up to 3 percent of your salary, and 50 percent of your contributions on an additional 2 percent. For example, if you contributed 5 percent of your salary to the retirement plan, your employer would contribute another 4 percent of your salary through its match. This means 9 percent of your salary would be going toward retirement savings, even though you contributed only 5 percent.

You always want to make sure you’re at least contributing enough to receive the full amount of any employer match available to you.

4. Deal with your debt as soon as possible

One thing that will really hold you back in saving for retirement, and building wealth in general, is debt.

Focus on paying off high-cost debt first such as credit card balances and student loans. These types of loans can come with interest rates in the high teens, which far outpaces what you’re likely to earn through your investments. If your debt balance is compounding at those high rates, the best investment you can make is to pay down the balance as soon as possible.

If you can, try to pay off any mortgages before you reach retirement age. It will make living on a fixed income that much easier.

5. Open an IRA

An individual retirement account (IRA) can also be a great way to boost your retirement savings. IRAs come with many more investment options than the limited choices in a 401(k) plan. You’ll be able to choose from individual stocks, bonds, ETFs, mutual funds and more. Contributions are limited to $6,500 in 2023, or $7,500 if you’re age 50 or older. Those limits will rise to $7,000 and $8,000, respectively, in 2024.

With a traditional IRA, you may be eligible for a tax deduction in the year you make a contribution, but you will pay taxes when you start making withdrawals during retirement. Withdrawals prior to age 59 ½ will come with taxes and a potential 10 percent penalty. Once you reach age 73, you must start making withdrawals.

Another option would be to open a Roth IRA, which has many of the same features as a traditional IRA, but has a big tax advantage too. Contributions to Roth IRAs are made with after-tax dollars, which means you won’t get a tax break upfront, but you won’t have to pay taxes on withdrawals during retirement. There also are no requirements to take withdrawals from a Roth IRA, so you can let the money grow longer and pass it on to your heirs or donate it to a charitable organization.

6. Budget spending

Small amounts of money can really add up over time when it’s invested wisely, so understanding how you’re spending your money today can help you develop a retirement savings plan.

It may be helpful to make a monthly budget and record every single thing you spend money on. Usually there are habits or patterns that reveal themselves during a budgeting exercise that can be eliminated to help you boost your savings. Maybe there are automatically renewing subscriptions that you’ve forgotten about, or too much spending on eating out. Remember that saving just a little more each month can really add up over time.

7. Plan your health insurance strategy

Many people neglect to plan for healthcare costs during retirement because they’re covered by their employer’s plan while they’re working. But healthcare costs during retirement can be substantial and some studies suggest you should set aside hundreds of thousands of dollars for them in your later years.

One useful way to save for these costs is through a health savings account (HSA). HSAs work similarly to retirement accounts, but the money can be withdrawn tax-free at any time to pay for qualified medical expenses. HSAs are offered as part of high-deductible health insurance plans and come with the triple tax benefit of tax-deductible contributions, tax-free withdrawals for medical expenses and tax-deferred growth on your investments.

Plus, HSAs can act as an additional retirement account because once you reach age 65, the money can be withdrawn for any reason, you’ll just have to pay taxes on withdrawals for non-medical purposes.

Bottom line

Saving enough money for retirement may feel like a monumental task, but if you develop a plan and stick to it, it is an achievable goal. Do whatever you can to start saving and investing today because even small amounts add up over the decades. Be sure to take advantage of your employer’s retirement plan options and contribute enough money to receive the full employer match.

Pay down high-cost debt as soon as possible and keep close track of your spending to avoid letting bad habits eat into your ability to save. If you’re looking for ways to save for medical costs during retirement, HSAs offer a triple tax benefit and can double as an additional retirement account.