How to Save More for Retirement in 2014

woman counting money in kitchen
By Joe Udo

Two of the most common New Year's resolutions are to get fitter and save more money. These resolutions are very difficult to keep because the goals aren't specific, and it's hard to keep track of them. It's better to make more specific goals like saving an extra $2,000 for retirement this year. Here are some ways all of us can save more for retirement this year. You're on your own for the fitness resolution. I will be struggling with that one, too.

Increase 401(k) contributions. For 2014, the 401(k) contribution limit remains $17,500 for people under 50. According to a Vanguard study, only 11 percent of 401(k) participants contribute up to the limit. If you are among the majority of 401(k) participants, then there is an easy way for you to save more for retirement. The economy continues to improve, and hopefully you'll get a raise this year. Once you receive notice of a pay increase, you can log on to your 401(k) plan and split this increase with your retirement account. This way you won't see a decrease in your take home pay. %VIRTUAL-article-sponsoredlinks%The raise will be a little smaller than you expected, but you will have met your goal of saving more for retirement.

It will be more difficult to save more if you don't see any raises this year. In that case, it's probably time to figure out a way to generate additional income through more education, a job change or even a side job.

Contribute to a Roth IRA. If you already maxed out your 401(k) contribution, then consider saving more in a Roth IRA. A Roth IRA isn't tax deductible, but you generally won't have to pay tax on the gain when you withdraw the money in retirement. For 2014, the Roth IRA contribution limit is $5,500 for people under age 50. The Roth IRA is easily my favorite retirement account, especially after a great year in the stock market. You can buy and sell stocks without having to worry about capital gains taxes, assuming you don't plan to withdraw the money before retirement.

Self-employment options. If you are self-employed, then there are a couple of options that can really boost your retirement savings. You can contribute as much as 25 percent of your net earnings from self-employment or up to $52,000 in 2014 to a simplified employee pension. Another option is the solo 401(k), to which you can contribute $17,500 via a salary deferral. Of course, you need a very successful business to be able to save this much.

Catch-up contributions. If you are 50 or older, then you can contribute an extra $5,500 to your 401(k) and an extra $1,000 to your Roth IRA. People who turned 50 recently should take a look at their retirement saving to see if they can increase it as they approach retirement.

Invest for passive income. It's best to take advantage of the tax-advantaged accounts available to people who save for retirement. But another option for those near retirement is to set up passive income streams:
  • Dividend stocks. A dividend stock portfolio can generate some supplemental income for your retirement. If you are in the 10 percent or 15 percent tax bracket, then you won't even have to pay tax on the dividend income.
  • Rentals. Rental properties can take a long time to generate good cash flow, so this is a long-term investment. It can also be a lot of work manage a rental property.
  • Peer-to-peer lending. Lending money on the Internet is a legitimate business now. The risks of lending can be high, but so can the return on your investments.
  • Bonds.Bonds can add predictable returns and stability to your portfolio, but they are not paying out much these days.
Saving more for retirement is a great New Year's resolution, but you need to get started on it right away. The longer you wait, the more difficult it will be to save more. If you are not maxing out your 401(k) contributions, then you should increase it a little bit right now. A 1 percent increase is barely noticeable, and you'll be done with one goal this year, no further exertion required.

Joe Udo blogs at Retire By 40 where he writes about passive income, frugal living, retirement investing and the challenges of early retirement. He recently left his corporate job to be a stay at home dad and blogger and is having the time of his life.

More from U.S. News

Ways Retirees are Making Money
See Gallery
How to Save More for Retirement in 2014
Walking dogs is a great way to stay fit, and many working individuals and families simply don't have time to give their pets the exercise they need. Dog walkers can charge $15 to $25 an hour, per dog.
Websites like have exploded the market for handmade goods of all sorts in the past few years. While it takes a lot of work to make a full-time living selling crafts, many retirees, stay-at-home moms and 9-to-5 workers turn their hobby into part-time income by selling crafts online. Whether you love to knit scarves, hand-quilt throws or throw pottery, there's an online market for your craft.
Retired teachers aren't the only ones with potential tutoring skills. If you're good in math, reading or other basic skills, tutoring could be a lucrative option. Advertise your independent tutoring services through word-of-mouth or Craigslist, or join an online tutor-finding service like Wyzant. Another option is to sign up with a local non-profit that pays tutors for their services.
If you love shopping for antiques, collectibles or other unique finds, consider shopping for them and then reselling them. Cruise estate and garage sales to find great deals, which you can turn around and sell on eBay or Craigslist at a profit.
If you're good with a wrench and know your way around crown molding, consider advertising your handyman services. Your state may require that you become licensed, especially for certain types of work, so check with your state's contractor licensing board to get started.
Engineers, scientists, management experts and others can all form careers as consultants. According to the Bureau of Labor Statistics, consultants in management make a median annual wage of $75,250, but you can also consult part-time for a high hourly fee. Turning your one-time profession into consulting jobs may be easier and more lucrative than you'd think.
If you're still healthy and mobile yourself, consider spending time with older folks who need help with everyday activities. Elder care can involve basics like running errands or giving a shut-in some regular company, or more involved activities like basic hygiene and nursing. Either way, this can be a fulfilling option.
On the other end of the spectrum, you could spend time caring for kids. As long as you've got the energy to keep up with little ones, you could offer all day or after school care for local children or even your own grandchildren. Just be sure to get and stay up to date on the latest nutrition and safety recommendations.
Maybe you don't really want to have a job, but have extra space in your home that you don't need. Consider taking on a renter in your spare room or basement. If you're traveling a lot during retirement, you could also rent your whole home out for short-term vacations.
Starting a blog is a great way to share your passion with the world, while making some extra money. There are plenty of online resources to teach you how to start, run and monetize a blog on just about any topic that interests you.
If you'd like to work sometimes and not others, consider signing up for temporary work. As employers seek to cut costs, many are hiring temporary workers to fill a myriad of roles. Temp jobs can let you experience lots of different types of work during retirement.
If you love growing fruit and vegetables, consider selling your extra produce at farmer's markets. Heirloom produce is in high demand right now. Another option is to grow perennials that need to be split each year. Each time you split your plants, you can sell the extras to aspiring gardeners.
If you're a local history buff or love the arts, consider finding opportunities to be a local tour guide or museum guide. You could even start your own local tour business, if your area is frequented by travelers.
Upcycled furniture is all the rage today, but some people simply don't have the time to spray paint and decoupage old pieces to give them new life. Retirees could upgrade old pieces of furniture and sell them online or locally, or offer their services for custom furniture upgrades.
Read Full Story