How to Achieve an Earlier or More Affluent Retirement

Quick Look

  • If you want to retire before you originally planned, you want a more affluent retirement lifestyle, or you want to build a buffer against a lower-than expected rate of return, you can increase your savings rate.
  • If you are already maxing out all your tax-advantage retirement accounts, you can open a standard brokerage account and invest for the long-term through that.


Good News!

Let’s start with some great news: You are already on track for your retirement savings! With the previous task you increased your savings rate to hit your nest egg goal by the age you want to retire given a projected rate of return. Few people can say this and it’s a fantastic accomplishment.

Reasons for Saving More

As you continue to progress in your financial maturity, you may wonder if there’s even more you can do and if you should be saving more. Here are the top reasons for increasing your savings rate even if you’re already on track.

  1. Retire Early: If you reach your nest egg goal number earlier than planned, you may be able to retire early. When you reach that point, just make sure to check that your planned withdrawal rate will last the duration of your now long-than-planned retirement period. (With most of your assets staying invested, some portfolios can last indefinitely given a low enough withdrawal rate but you’ll want to review this for your particular circumstance.)
  2. Improved Lifestyle: By increasing your savings rate but retiring at the same age you originally planned, you may have more resources to enjoy your retirement. This may mean more travel, a more luxurious lifestyle, buying a second home, or more. It may also mean you have the resources to support children or grandchildren should the opportunity arise.
  3. Hedge Against Poorer Rate of Return: In the long-term the stock market has steadily grown. But even over longer-term time horizons like 20 years, there are huge differences between the best and worst 20 year periods. If you assumed something close to “average performance” but the actual rate of return was less than that, unless you saved more than you originally planned, you may not hit your nest egg goal on schedule.
  4. Hedge Against Your Future Ability to Save: With your current job and lifestyle, you may be able to save at a given rate to achieve your goals. But what if you lose your job or change jobs to something less lucrative? What if your expenses rise unexpectedly? These circumstances would affect your ability to save. What’s more, periods of reduced income or increased expenses should be expected to a certain degree. But the more you save now, the harder it will be to get thrown off by future events you can’t control.

Where & How to Save More

If you want to save and invest more for your retirement, you have a few options.

  • Use Existing Accounts: If you already have retirement accounts, you can increase the percentage of your pay you put into those (if it’s an employer-sponsored account), or increase the dollar amount you regularly contribute (for individual retirement arrangements, i.e. IRAs).
  • Open a New Tax-advantaged Account: If you’re already maxing out in one type of retirement account and you’re still eligible to contribute to another type that you haven’t yet opened, you can do that. For example, in 2023 you may have maxed out your 401(k) at the IRS-imposed limit of $22,500 a year ($30,000 if you’re 50 or older). But if you make less than $153,000 a year (for single filers) or $228,000 (for married filing jointly), you’re eligible to contribute to a Roth IRA too. The Roth will give you tax-free dollars you can draw on in retirement.
  • Self-employment Income & Savings: As discussed in previous tasks, self-employment income makes you eligible for various types of self-employed and tax-advantaged retirement accounts like Individual 401(ks), SEP IRAs etc. If you’re not already self-employed, you can open up a side business and contribute that way.
  • Traditional Brokerage Account: Here’s the bad news: Traditional brokerage investment accounts are not taxed advantaged. This means you’ll pay taxes on the money before you put it into that account (in the form of income tax), and you’ll also pay taxes on any earnings from that account in the year you receive them. These earnings include realized capital gains (which happens when you sell the stock), dividends, and interest. But there’s good news too: Traditional brokerage accounts are not subject to limitations of taxed advantaged accounts. This means can contribute as much as you want, withdraw as much as you want, and you can do it whenever you want – regardless of income limitations or anything else. If you’re looking to save and invest more, don’t overlook the value of traditional brokerage accounts simply because they’re not tax-advantaged.

Calculate the Impact of Additional Savings

If you’ve decided you are able to save more, take a moment to understand the impact additional saving at a given monthly rate can have on your goals. You can easily do this using the MoneySwell Retirement Planner. In Step 2 in the Goals & Progress section, modify your Stretch goal savings number for the year based on your new hoped-for annual savings number. Then, scroll down to the Future Outlook section and compare the projected future value of your retirement savings for a given year given your Target vs. your Stretch annual savings values.


Once you’ve decided on a new, higher amount that works for your budget and your goals:

  1. Write down the increased amount and the date you started doing this in the notes section of this task (logged-in users only) for future reference.
  2. Make the updates in your retirement accounts by changing the percentage contribution rate or the automatically invested dollar amount you save and invest on a monthly basis.

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