Many have mulled this question; few have been lucky enough to answer it: Take lottery winnings as a lump sum or annuity?
As with any financial decision, there are pros and cons to both sides. But the pro to a lump sum is often the same as the con: You get to take that money and run. For some that means investing it; for others, it means wallpapering their house with $100 bills.
A recent MetLife survey highlighted how this choice shakes out when it comes to retirement: One in five retirees who took their pension or defined contribution plan, such as a 401(k), as a lump sum depleted it in an average of 5 ½ years.
The lesson for millennials and those still saving: When in doubt, keep money you’ve set aside for retirement, or money you want to set aside for retirement, out of your hands.
There are a lot of ways to do that, but here are five.
1. Lock that money up
The goal is to make retirement savings as inaccessible as possible until you need them. You can accomplish that by putting them in an individual retirement account or a 401(k).
Both generally penalize users who tap money before age 59 ½. A Roth IRA is most flexible: You can get your hands on contributions, but not earnings, at any time. But if you take an early distribution from your traditional IRA or 401(k), you’ll almost always pay a 10% penalty. The list of exceptions is short.
That might sound like a bummer, but the IRS is doing you a favor — retirement money should be for retirement. And you might think twice about an early distribution if it means peeling off a chunk of that cash for the IRS.
2. Give your 401(k) a raise
If you’ve ever gotten a raise and immediately felt like you didn’t, you understand the concept of lifestyle inflation. Extra money can quickly turn into extra expenses rather than savings or breathing room in your budget.
Of course, extra money can also make a budget livable or help pay down debt. But if you’re on solid financial footing and suspect your daily expenses will slowly creep up to the level of that raise, sign in to your 401(k) provider’s website and adjust your contribution upward so most of the raise goes directly there.
3. Direct deposit a windfall
We’re coming out of tax refund season, but it’s possible that won’t be your last windfall this year. Bonuses and inheritances happen, and you never know when that scratch-off ticket is going to be the one.
There are a lot of ways to invest extra money, but if you want to ensure that cash actually gets set aside, bypass your checking account.
If a tax refund is still coming to you, ask the IRS to direct deposit it; Uncle Sam will even generously split it among up to three accounts. (Too late? You know for next year.) Most companies allow employees to send a portion of their bonuses to a 401(k), and you can have an inheritance deposited to an IRA, assuming you have enough taxable compensation to cover the contribution and you stay under the IRA contribution limit.
4. Do a direct 401(k) rollover
When you leave a job, there are generally a few ways you can handle the money you’ve accumulated in a 401(k): You can leave it where it is, cash it out or roll it over to a new account; either an IRA or your new employer’s plan, if it accepts transfers.
Cashing out sounds like fun until you consider the cost: You’ll pay a 10% penalty if it’s an early distribution, plus income taxes. A $10,000 401(k) balance can quickly become $6,000 or $7,000. That penalty and tax hit might also apply if you intend to roll the money over into an IRA or new 401(k), but miss the IRS’s 60-day deadline for doing so.
Bottom line: We’ve all had good intentions but failed to follow through. Do yourself a favor — both the self who pays taxes today and the self who wants to retire later — and ask your 401(k) provider to do a direct rollover. This moves the money into the new account without it touching your wallet.
5. Save at the beginning of the month
You don’t have to be a formal, Excel-spreadsheets-and-counting-pennies budgeter to follow this advice: Put aside the amount you want to save each month after your first paycheck. This sets you up to save before you spend, rather than saving whatever you have leftover — which is often nothing. It’s a quick trick that leads to a much bigger account balance.
This article was written by NerdWallet and was originally published by Forbes.