How to “Find” Money to Invest in a 403(b) - and Fight Inflation Too!
June 3, 2025
By Barbara O'Neill, CFP®, AFC®
Many blogs, including this one, routinely state the maximum amount that workers are allowed to contribute to a 403(b) or other tax-deferred employer retirement savings plan. In 2025, those numbers are $23,500 for workers under age 50 and $31,000 for those age 50 and older.
The reality, however, is that only a small percentage of workers contribute the maximum amount and annually inflation-indexed limits mean very little to most workers. In 2023, only 14% of 401(k) participants “maxed out.” 403(b) plan statistics are likely the same or lower (most public employees have modest incomes) but are not widely tracked.
What is much more likely is plan participants wanting to bump up their 403(b) contribution - not to the maximum allowed by law but to a higher number than they are currently saving. This requires “finding” (i.e., freeing up funds from reduced spending and/or increased income) money to save. Consider these scenarios:
- A twenty-something 403(b) participant wants to increase savings from $4,000 annually to $10,000. The $6,000 increase requires “finding” $500 per month.
- A fifty-something 403(b) participant wants to increase savings from $13,000 annually to $25,000. The $12,000 increase requires “finding” $1,000 per month.
This post describes dozens of strategies to “find” money to increase 403(b) plan savings. These same strategies can be used to claw back increased costs of living due to inflation. The cumulative inflation rate since February 2020, as measured by the Consumer Price Index (CPI), is 23.3%!
Money-saving strategies are grouped into two categories: “big ticket” and “small steps.” Also included is a summary of research about what motivates people to save. The post concludes with three “need to know” facts, and six take-away action steps.
“Big Ticket” Strategies
“Big ticket” is a term used to describe transactions that involve a significant cost. This includes household expenses like housing and transportation and large retail purchases like furniture and electronics.
Reducing or eliminating “big ticket” expenses from your budget- or receiving “big ticket” income windfalls- are great ways to “find” money to save in a 403(b). Consider the following examples:
Car Loan Payments — The average monthly car loan payment in early 2025 is $725 for new vehicles and $525 for used ones and loan terms are 67.98 and 67.20 months, respectively, according to Nerdwallet. Eliminating new and used car loan payments would free up $8,700 and $6,300 annually, some or all of which can be reallocated to a 403(b).
Child Care — While prices vary nationwide, the average annual cost of child care in 2023 was $11,582. When children “age out,” a significant chunk of change can be reallocated for 403(b) savings and other financial goals.
College Tuition — The average cost of a four-year college degree at a public college (in-state) is $108,584 and private colleges cost $226,512. Some parents pay part of their children’s college expenses from current income. When their children graduate, money is freed up to save.
Housing — A time-honored way to boost retirement savings and/or lower expenses is trading down to a smaller home with lower utility costs, property taxes, and mortgage payments. People who do this while they are working can offset the cost of increased 403(b) contributions with reduced expenses during their prime earning years.
Windfalls — One-time cash infusions, like bonuses, tax refunds, prize winnings, retroactive pay, and inheritances- or the interest earned on them- can be used as a source of income to offset the decreased net pay that results from increasing 403(b) contributions. Another windfall strategy is saving “extra” paychecks: two months of the year with three paydays if you get paid bi-weekly and four months of the year with five weekly paydays.
“Small Steps” Strategies
Below are strategies, organized into thirteen categories, to “find” small dollar amounts for 403(b) plan savings. When combined, they could generate almost as much money as the big ticket savings ideas. Not every strategy will appeal or apply to everyone. Pick those that are relevant and realistic.
Expense Reduction
Groceries — Cost-Cutting Strategies: Purchase store brands, eat more meatless meals, stock up on sale items, consider a warehouse store (if cost-effective), eliminate or reduce high-cost “junk” foods, use coupons/double coupons, join supermarket rewards clubs, buy and freeze local seasonal produce, use grocery shopping apps, build impulse buys into your shopping list budget, request rainchecks on sale items, and make recipe substitutions (e.g., applesauce for eggs in baking).
Eating Out — Cost-Cutting Strategies: Drink water instead of soft drinks or alcoholic beverages, buy only one drink and “stretch” it with ice and/or water, share an entrée or dessert, eat an appetizer as a meal, select BYOB restaurants for meals with adult beverages, consider a “linner” (late lunch/early dinner) or “early bird specials,” and bring takeout containers for another meal at home.
Gasoline — Cost-Cutting Strategies: Drive less and consolidate trips for errands, find inexpensive gas with apps like GasBuddy and Waze, pay with cash if there is a discount, join a fuel rewards program, time fill-ups (Mondays have lowest gas prices and weekends are highest), check tire pressure, lighten loads, and carpool with others.
Road Trips and Vacations — Cost-Cutting Strategies: Pack food and beverages in a cooler, try to eat out only once a day, stay at hotels with free breakfast, get hotel coupons at rest stops, travel with a group and share expenses, travel at “off-peak” times, join hotel and airline rewards programs, and take daycations (day trips) and staycations (time spent at home or in your community).
Utilities — Cost-Cutting Strategies: Adjust your thermostat (warmer in summer and cooler in winter), turn down the water heater, unplug items not in use using a power strip, take advantage of off-peak electricity rates, change HVAC filters regularly, use LED light bulbs, wash (most) laundry in warm water, empty dryer lint traps after every load of wash, and switch to low-flow showerheads.
Clothing — Cost-Cutting Strategies: Buy fewer clothes and shoes, use coupons and shop sales at department stores, join retailer loyalty programs to earn rewards, shop at thrift and consignment stores, shop for deals online, and make simple clothing repairs and alterations.
“Big Ticket” Purchases — Cost-Cutting Strategies: Shop around and compare at least three vendors with a Rule of Three Worksheet. Also ask about the availability of discounts (e.g., Veterans and older adults).
Insurance — Cost-Cutting Strategies: Play “what if” (e.g., I raise my deductible) with an insurance agent to determine possible ways to lower premiums without sacrificing coverage, double-check for policy discounts you qualify for, shop around for coverage, sign up for auto-pay or online billing, and pay premiums annually vs. monthly.
Budgeting — Cost-Cutting Strategies: Discontinue low value auto-pay bills and make a list of ways to cut expenses to put more money in your 403(b). Then “do the math.” For example, 10 or 12 of the strategies listed above could free up $500 per month (or more) for 403(b) savings.
Miscellaneous — Cost-Cutting Strategies: Sell unused items, participate in paid surveys, use cash-back credit cards, use generic medications (if physician agrees), utilize free wellness programs, pet rabies clinics, and other public benefits, host potlucks instead of eating out, and volunteer at events for free access.
Income Generation
Tax Savings — Adjust your W-4 form for a higher 403(b) contribution to increase your net income and free up offsetting cash. For example, if taxpayers in the 22% tax bracket contribute an additional $10,000 annually to a 403(b), they will lower their taxable income, save $2,200 in federal taxes, and only feel a $7,800 drop in take-home pay.
Saving and Investing — Shop around for attractive annual percentage yields (APYs) on savings and money market accounts and ladder certificates of deposit (CDs) and bonds to hedge inflation (i.e., select staggered maturity dates).
A Side Hustle — Generate freelance income to supplement reduced income from your “day job” due to increased 403(b) contributions. In addition to extra income, you will earn quarters of coverage for Social Security benefits.
Research Results
Findings from a study of the relationship between time orientation (present or future) and savings rates indicated that a cyclical savings method that fosters a focus on the present, concrete implementation planning, and an emphasis on action under recurrent conditions leads to higher savings rates than a linear time orientation that points people toward the future.
A key decision that employees must make is what percentage of their paycheck to save. The cyclical savings method was found to likely increase the savings rate chosen.
Three (More) Things
- A cash flow statement increases awareness of current income and expenses, including 403(b) plan savings.
- Saving money is a matter of priorities, attitude, and action. You must want to do it and create a viable plan.
- Reinvesting interest/dividends automatically from taxable (brokerage) accounts builds wealth over time.
Six Smart Strategies
No. 1: Pay Yourself First — Treat 403(b) plan savings with the “respect” given to major household bills like a car loan or mortgage. Just like missing loan payments has consequences, so does skipping savings.
No. 2: Define Your Savings Goal — “Do the math” to break annual 403(b) contributions into a weekly savings amounts. Example: $10,000 per year = ~$192 per week.
No. 3: Visualize Savings Success — Think about how you will feel living a retirement lifestyle with adequate savings. Visualizing success increases motivation to save.
No. 4: Determine “Enough” — Use several online retirement calculators to determine what you need to save to close the gap between anticipated living costs and what you currently have saved.
No. 5: Spend By Choice — Avoid mindless spending at stores and online and set a spending cap for discretionary expenses to free up money to save.
No. 6: Get Help When Needed — Consult with a financial advisor, tax planner, and 403(b) plan custodian, as needed, for questions specific to your retirement plans.
In Summary
Any amount of 403(b) savings is better than none and additional savings beyond what is currently being saved is better still. There is no single “one size fits all” strategy to “find” money to save in a 403(b) plan. Review the options discussed above and pick those that seem right for you.
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Dr. O'Neill is the owner/CEO of Money Talk: Financial Planning Seminars and Publications where she writes, speaks, and reviews content about personal finance. She is a Distinguished Professor Emeritus at Rutgers University and a long-time 403(b) plan participant.