Saving more for retirement often requires intentional financial decisions and at times, meaningful changes to your saving habits. The good news is that even a few well-timed actions can make a significant difference to your long-term outcome.

As the tax year gets underway, it’s an ideal time to focus on practical ways to grow your retirement savings, reduce unnecessary tax, and make your money work harder over time. Here are three smart strategies to help you build a stronger financial future.

Optimise your retirement savings for tax efficiency

From an actuary’s perspective, there are two forces that determine how our savings grow and our investments prosper:

• Keeping costs as low as possible.
• Propelling growth as much as you can.

Think of it like a nice tub of water to relax in after a long day. You can compare the hot water with growth and the cold with costs. The costs cool the growth a little, and if you can keep costs as low as possible, you need less electricity to keep things comfortable. You can see tax as part of the costs. It depletes growth. This means the lower we can keep the tax, the better.

That’s why retirement savings vehicles such as retirement annuities are so powerful. They offer a double advantage:

• You get tax breaks: The tax break is as big as the tax rate you usually pay on your income. This is a far bigger and easier incentive than the meagre money we make from trying to do 10 000 steps a day or using a supermarket coupon.
• Your investment growth is tax-free.

In other words, you’re using two leverages to catapult your growth faster.

Yes, there is a limit to the tax breaks, but they kick in at very high levels of contributions to retirement savings.

Start early to let compound interest do the legwork

While tax is a visible cost you can save right now, inflation is the quiet force you must outrun for tomorrow. Those stories that your parents tell about how much a packet of chips cost when they were little? We’re going to tell the same stories. And we’re going to weep if we don’t put away enough money now that can grow faster than the inflation monster that gobbles up our buying power.

This is where compound interest does the legwork. Like yeast in bread dough that keeps rising after time in the sunny market, compound interest keeps the growth going by helping you earn returns not only on the money you invest, but also on the growth that money has already generated. Over time, that “growth on growth” effect can make a meaningful difference.

A little money now has lots of time to grow over time. The key is to save consistently. If you start later, you will need a lot of money because you have little time for growth.