A Painless Way to Save More for Retirement

Saving enough for retirement is one of the biggest financial challenges that people face. It's tough to tie up large percentages of our income for decades when there are so many things we could be spending it on today. But there's a tool many employers offer that can make saving enough for retirement far easier: auto escalation.

When they first sign up for the company 401(k) plan, many workers pick a small percentage to contribute – often limiting themselves to just enough to max out the company match – and then never revisit their contribution level. After all, if you're earning just enough to get by, you're not likely to decide to set aside yet more of your money for retirement.

Auto escalation gradually and automatically increases your 401(k) contribution each year until you hit the preset cap. Many auto escalation plans will increase your saving rate by 1% per year until you're saving 15% of your income -- the percentage recommended by many retirement experts. However, check with your HR representative to find out what percentages your own plan uses.

Source: Fool.com