64% of working-age individuals worry that they won’t have enough savings for retirement.
But, should you be afraid of having less than your savings goal?
The obvious answer is NO, as long as you apply retirement planning strategies in your investments.
If you want a nest egg that can withstand inflation risks, market fluctuations, and your unexpected longevity, making the most of your savings is crucial.
Here are a few tips to maximize your savings and ensure a secure retirement.
Open a traditional or Roth IRA.
An individual retirement account (IRA) allows you to establish a sufficient nest egg. There are two kinds of IRA: traditional and Roth.
A traditional IRA may work depending on your income and whether you or your spouse are workplace retirement plan holders. Your investment earnings have the chance to grow tax-deferred until you make a withdrawal during retirement.
If you have a federal tax filing status proving that you meet the phased out income limits, a Roth IRA would be the better option. Since this is funded with after-tax contributions, a Roth IRA’s qualified distributions are federal-tax-free if holding period requirements are satisfied.
Do catch-up contributions (for ages 50 and up).
Starting early to save is essential because annual contributions to 401(k) plans and IRAs are limited. Here’s the good news, though: Once you reach age 50, you’re allowed to go over the normal limits with catch up contributions to 401(k) plans and IRAs.
If you haven’t saved as much over the years, you can still catch up and boost your retirement savings.
Use taxable investment accounts
Have you reached the contribution limits for your tax-advantaged accounts, but you still want to increase your savings? Then your nest egg might benefit from a taxable account.
Let’s say you’re planning to retire early. There’s a great chance you won’t be able to access an IRA or 401(k) without penalty. With a taxable retirement account, you can access multiple options.
Depending on your status, a taxable account helps you with some investments. An example would be putting municipal bonds in a taxable account instead of a traditional IRA. Consider speaking to a financial advisor to know which path would suit you best.
Meet your employer’s match
Does your company provide an employer match? If yes, then make sure to utilize it.
It’s essentially free money dedicated to increasing your retirement account—don’t waste it. Now, here’s how it works: An employer may match 50% of employee contributions up to 5% of your salary. If you’re earning $50,000 on an annual basis and contribute $2,500 to your retirement plan, your employer will offer an additional $1,250.
Hire a Retirement Planning Expert NOW
Whether you’re in your 20s or 40s, it’s never too late to start with retirement planning. Preparing early does yield significant results, but having a rock-solid financial strategy is also important.
With a financial advisor’s guidance, you can identify your total income and expenses, and create a realistic retirement budget. They’ll also help you determine your risk tolerance, income goals, and the actions and decisions necessary for a tension-free retirement.
Ready to know more about retirement planning?
Contact your trusted financial advisor today and start planning for a stress-free future.