This Deceptively Simple Move Could Send Your Retirement Savings Skyrocketing

Your retirement plan probably doesn’t look like anyone else’s, and that’s OK. We all have our own goals and preferred strategies for reaching them. But it’s important not to get so stuck in our ways that we forget to explore all of the options available to us to see if there’s a better approach.

Case in point: There are still many workers who are overlooking this super simple strategy for increasing their retirement savings and possibly squeezing more money out of their jobs each year. Here’s what you need to know.

Two coworkers discussing a document.

Image source: Getty Images.

Having access to a retirement plan isn’t enough

Access to a workplace retirement plan can make saving for your future a lot easier — but only if you use the plan. That might seem obvious, but there are a lot of people who skip the most important step by not deferring a percentage of their paycheck to their retirement account. About 69% of private industry workers had access to a workplace retirement plan in 2022, according to the Bureau of Labor Statistics, but only 52% actually contributed to these plans.

That means about 25% of workers who had access to a 401(k) or other workplace retirement plan chose not to put any money there in 2022. For some, this probably wasn’t a choice they made lightly. A lot of people struggled with inflation last year and may have needed all the money they earned to cover their bills.

But others may just have forgotten to enroll or prioritized other financial goals above retirement saving. And they could be missing out. Many employers offer 401(k) matches to qualifying employees, but you can only get this if you put money into your retirement account first. Even if you don’t qualify for a match, regular contributions can still help your retirement savings grow much faster than sporadic contributions.

The effect of regular retirement contributions over time

Retirement savings might feel insignificant when you’re only able to set aside a few dollars each pay period. And they might not seem urgent when you’re decades away from retirement. But both of these are serious misconceptions.

Every dollar counts, and the longer your savings remains invested, the more it’ll probably be worth by the time you’re ready to retire. The following table illustrates how much you could end up with if you saved various sums over 10, 20, and 30 years and earned a 10% average annual rate of return during that time.

Monthly Contribution Rate

Balance After 10 Years

Balance After 20 Years

Balance After 30 Years

















Source: Calculations by author.

These are only estimates. You won’t earn a perfect 10% return every year. But you can still see from this how, even with small monthly contributions, you can wind up with a large sum over time. But consistency is key. 

If you haven’t already enrolled in your workplace retirement plan but are eligible to do so, see if you can request that your employer defer a certain percentage of each paycheck to the account. It’s up to you to decide what you’re comfortable with. Ideally, you’d base your monthly savings goal on your estimated retirement expenses, but not everyone can afford to save that much right away.

If you can’t set aside as much as you’d like, start with whatever you’re able to save. Then, if possible, aim to increase your retirement contributions by 1% of your income each year. If you make $50,000 per year, that’s only an increase of $500 per year, or about $42 per month. Continue raising your annual contribution rate whenever possible until you reach your savings target.

If you switch employers in the future, be sure to inquire about plan requirements right away and sign up as soon as possible if the company doesn’t auto-enroll you. It might take a while before you notice any major gains, but your efforts will begin to stack up over time.