Getting a Second Job to Save for Retirement

Some full-time jobs don't pay enough to allow employees to cover their expenses and save for retirement at the same time. To bridge the gap, some people work full-time and have a second job on the side, perhaps as a freelance writer by night, a regular at a local comedy club or some weekend shifts as a barista. A side hustle can help you get out of debt and then start building wealth for the future. Saving for retirement is an excellent use for this extra income. You can use side hustle income to create a nest egg for retirement, even if you're already contributing to a 401(k) through your day job. Some savings strategies might even qualify you for tax breaks. Here's how to save for retirement when you earn income from two or more jobs:

[Read: How to Save for Retirement on Less Than $40,000 Per Year.]

Max out your 401(k). Unless you're earning a lot at your full-time job, you may be unable to afford to max out your 401(k) on one salary. The 401(k) contribution limit for 2016 is $18,000, which is $1,500 per month. While you may not be able to put $1,500 per month into your 401(k) while earning a single paycheck, when you factor in your side hustle income, you might be able to contribute more to your 401(k) plan. In this case, you could bump up your pre-tax deductions for your 401(k), and then rely on your side hustle income to pay the bills.

This method works best for those who have a predictable side hustle income. However, this option is less flexible than saving outside the 401(k) plan because it may take a pay period or two to change your pre-tax 401(k) contributions. If you start contributing half of your paycheck to your 401(k) and then have a slow month with your side hustle, you might get yourself into a financial pickle. It's best to use this option only if you have a steady side job.

[Read: How to Become a Millionaire by Retirement.]

Open a Roth IRA. Whether you are able to max out your 401(k) or not, adding a Roth IRA to your portfolio can help diversify your retirement savings. Roth IRA contributions don't get you a tax break when you make them, but they grow tax-free and are not taxed upon withdrawal in retirement. So, a Roth IRA can help you grow your savings without having to pay any further taxes on it.

However, if you make too much money, you aren't eligible to save in a Roth IRA. If your adjusted gross income from all your jobs is less than $117,000 as an individual or $184,000 as part of a married couple, you can contribute up to $5,500 to a Roth IRA in 2016. That amount increases to $6,500 if you are age 50 or older. Roth IRA eligibility phases out for those earning between $117,000 and $132,000 ($184,000 to $194,000 for married couples), but you might still be able to make smaller contributions to a Roth IRA. Those earning more than these cutoffs typically can't capture the tax-free investment growth these accounts promise. So be careful about contributing to a Roth IRA if your side income pushes you toward this annual limit.

[See: 10 Ways to Repair Your Retirement Finances.]

Try a traditional IRA. You could also contribute your side hustle income of up to $5,500 to a traditional IRA, which will allow you to defer paying income tax on that amount. However, while working two jobs, there's a possibility that you might earn too much money to take a tax deduction for these contributions. High earners are unable to defer taxes on contributions to both a 401(k) and a traditional IRA. The tax deduction is phased for individuals earning between $61,000 and $71,000 ($98,000 to $118,000 for couples), when the account owner is also eligible to save in a 401(k) plan at work. But these income limits don't apply to people who aren't offered the opportunity to participate in a 401(k) plan at any of their jobs. If you qualify, the money saved in a traditional IRA will grow without being taxed each year, and you won't owe tax on the money in the account or the investment earnings until they are withdrawn from the account.

You can save more for retirement if you work a side hustle in addition to your regular job. You have a lot of choices when it comes to saving your side hustle income for retirement. The options you are eligible for will depend on your financial situation, including how much money you make and how much you can afford to save in total. Adding even a few thousand dollars per year to your retirement savings because of your side job can make a huge difference in your total retirement savings over time.

Abby Hayes is a freelance blogger and journalist who writes for the personal finance blog The Dough Roller, which covers topics ranging from credit scores and banking to how much money you should be saving.