Thinking about retiring early? To ensure that you’ll have enough money to live off of in future years, sock away money now. Since income tax rates are typically higher than returns on investment, be sure to include tax planning when looking at the big picture. Here are seven tax-favored strategies to consider if you’re planning for retirement now.

1. Contribute to your 401(k) and take advantage of employee matches. A 401(k) plan allows you to contribute pre-tax dollars to a retirement account where it grows tax-deferred.
You can control how the funds are invested but choices may be limited to offerings by the administrator (like Vanguard or Fidelity).

How much should you contribute? As much as you can, keeping in mind that you still have to eat and pay rent. For 2017, the contribution limit for 401(k) plans is $18,000 ($24,000 if you’re over age 50).

Even if you don’t max out your contributions, be sure to invest enough to qualify for any available employer match. With an employer match, your company will match your contributions—also tax-free—up to a certain limit (typically 3%). Let’s say you make $50,000 per year. With a 3% contribution rate, you’ll put away $1,500; if your employer offers a match, it bumps to $3,000. At a 25% marginal rate, you can defer $375 in tax in the year you make the contribution ($750 with a match). And remember, the entire amount will grow tax-free until retirement.

2. Stuff your Health Savings Account (HSA). An HSA is intended to be used to pay for healthcare, but if you stay healthy, you can use it to save for retirement.

Here’s how it works. You can make pre-tax contributions to your HSA out of your paycheck. Your employer may also opt to kick in funds. Employer contributions are not considered income for tax purposes so not only is it free money, it’s tax-free. No matter who makes the contributions, funds in an HSA will grow federal income tax-free.

For 2017, you can contribute up to $3,400 ($6,750 for families) to your HSA. Distributions for qualified medical expenses (including dental and vision) are not taxable for federal purposes. Withdrawals for other expenses are taxable and may be subject to an early withdrawal penalty, as with most retirement accounts. However, after age 65, there is no additional tax on distributions.

And you keep it as long as you want: the HSA is portable, so it’s yours even if you change jobs or retire.

3. Open an Individual Retirement Arrangement (IRA). You can contribute to a traditional IRA whether or not you participate in another retirement plan. Contributions to a traditional IRA made with after tax-money are typically deductible. Another perk? Funds grow tax-deferred until retirement.

If you’re young and in a low tax bracket, consider a Roth IRA. You won’t benefit from an immediate tax deduction and you’ll pay tax on contributions now. But as long as you follow the rules, you can make tax-free withdrawals later.

The same contribution limit applies to all of your Roth and traditional IRAs. For 2017, that means your total traditional and Roth IRA contributions cannot exceed $5,500 ($6,500 if you’re over age 50) or the amount of your taxable compensation for the year, whichever is smaller.

4. Consider whole life insurance. While you’re young, life insurance is affordable. Most people opt for term policies because they’re cheap: you pay a fixed amount for a term (usually up to 30 years). If you die during the term, your beneficiaries receive a death benefit. If you don’t, you’re only out the cost of the premium since a term policy has no value.

In contrast, whole life is permanent insurance: it doesn’t disappear. As a result, premiums are more expensive than for term policies. The upside of those increased premiums is that value builds inside the policy, and it grows tax-deferred.
Typically, you can manage investments inside the policy, and in most instances, you can also borrow against the policy.
And if you want to cash in? Unlike a term policy, a whole life policy has value.

5. Invest in real estate. You won’t pay tax on appreciated real estate until you sell it, and even then you may be able to exempt part or all of the gain. You can exclude the gain from the sale of your home—up to $250,000 for single and $500,000 for married taxpayers—so long as you’ve owned and lived in the home for two of the five years before the sale.

If you use the property as a second or vacation home, you can’t exempt the gain, but you can defer it: you won’t pay tax until you sell.

You may be able to rent out the property and save on taxes, too. If you rent out your residence for fewer than 15 days in a year, you don’t report any of the rental income for federal tax purposes.

Even if it’s not your home, real estate can still be a good investment strategy for tax purposes. If you treat the property as rental real estate, you can use the income to pay expenses and squirrel the net proceeds away (after paying tax on the income, of course).

6. Direct your tax refund to savings. Chances are that you’ll want to spend your tax refund check before you receive it. Curb that temptation by sending your tax refund directly to savings.

The average federal income tax refund issued to taxpayers in 2017 was a whopping $2,940. Even with modest growth, if you sock that amount away each year for just ten years, you’ll be ahead by nearly $50,000.

Arranging for direct deposit of your tax refund is simple: just check the box on your tax return, enter your bank account information, and start saving.

7. Consult with a professional. If you intend to pursue an aggressive growth plan and hope to shield as much as possible from tax, consider hiring a professional or better yet, two. Seek out an investment advisor and a tax pro.

Don’t assume that hiring a good tax pro will be complicated or expensive. Pricing is important but don’t hire just on cost: ask questions and get a referral.

Another plus? Fees for tax advice—and investment advice—are generally tax-deductible.

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Kelly Erb is a tax attorney, tax writer and podcaster.

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