It's never too late to start saving for retirement, but the sooner you begin, the more time your money has to grow. That's because gains each year build on the prior year's gains thanks to the power of compound interest - and it's the best way to accumulate wealth. Let's take a look at ten tips to help you when saving for retirement:

Set Realistic Goals and Understand Your Risk Tolerance

Project your retirement expenses based on your needs, not rules of thumb. Be honest about how you want to live in retirement and how much it will cost. Then calculate how much you must save to supplement Social Security and other sources of retirement income. Generally, the greater the risk, the greater the reward will be, but not everyone is comfortable taking a lot of risk. If you're losing sleep over your investments (e.g., if your asset allocation is 100 percent invested in stocks during a volatile stock market), you should probably reduce your level of risk and opt for other types of investments such as index funds.

Take Advantage of a 401(k)

Contributing money to a 401(k) Is one of the easiest and best ways to save for retirement. Not only does it give you an immediate tax deduction and tax-deferred growth on your savings, but for many people, it also means a matching contribution from your employer.

Contribute to an IRA

As with a 401(k), IRA contributions offer substantial tax breaks and can give your savings a tax-advantaged boost. As a reminder, there are two types of IRAs: traditional and Roth. A traditional IRA offers tax-deferred growth, meaning you pay taxes on your investment gains only when you make withdrawals. If you qualify, your contributions may be deductible. By contrast, a Roth IRA doesn't allow for tax-deductible contributions, but it does offer tax-free growth; i.e., you owe no tax when you make withdrawals.

Focus On Asset Allocation More Than Individual Stocks

Asset allocation is dividing your investment dollars among the three main types of investment categories: stocks, bonds, and cash or cash equivalents. The right mix of assets is the single most important factor in determining the overall performance of your portfolio and will significantly impact your long-term returns.

Stocks Are Best For Long-Term Growth

Stocks have the best chance of achieving high returns over long periods. A healthy dose will help ensure that your savings grow faster than inflation, increasing the purchasing power of your nest egg. Keep in mind that investing in stocks doesn't necessarily mean individual stock picks. You can also invest in index funds, which are a type of mutual fund or exchange-traded fund (ETF) consisting of a basket of stocks that track one of the market indices such as the S&P 500 or the Nasdaq 100.

Don't Move Too Heavily Into Bonds, Even In Retirement

Many retirees stash a significant portion of their portfolio in bonds for the income. Unfortunately, over 10 to 15 years, inflation can easily erode the purchasing power of bonds' interest payments. Remember, it is important to diversify your portfolio to contain different types of investments within each major asset class.

Make Tax-Efficient Withdrawals To Stretch The Life Of Your Nest Egg

Once you're retired, your assets can last several more years if you draw on money from taxable accounts first and let tax-advantaged accounts compound for as long as possible. You can also withdraw from any investments that have lost value, then focus on selling investments held for more than a year to take advantage of lower long-term capital gains tax rates.

Work Part-time

Working part-time after you've retired benefits most people in more ways than one. It keeps you socially engaged and reduces the amount of your nest egg you must withdraw each year once you retire. In 2022, you can earn up to $19,560 without affecting your monthly social security benefit.

Think Outside the Box

Other ways to get more mileage out of your retirement assets include relocating to an area with a lower cost of living or transforming the equity in your home into income by taking out a reverse mortgage. While reverse mortgages are not for everyone, they can be useful for retirees who might have trouble meeting basic expenses but live in a $500,000 dollar home with no mortgage.

Consult a Tax Professional

A tax and accounting professional will evaluate your financial situation (i.e., income and expenses), evaluate your tax situation, and help you figure out how much you can put towards your retirement savings.