5Retirement is something everyone looks forward too. All those years of hard work are finally starting to pay off as you approach your retirement years. However, for some people saving for retirement has been near impossible, leaving them to worry about their financial stability during their golden years. Here are the top five ways to boost your retirement savings without all the hassle.
- Funding 401k
Chances are you are already enrolled in the 401k (or similar plan) that your employer offers. Consider maxing out this account over the next few years to maximize your retirement pay. Most employers will match employee contributions to this account, doubling the amount saved in half the time. The maximum amount you may contribute to a 401k is adjusted each year along with a catch-up contribution for those ages 50 or older. In 2020 the maximum contribution amount is $19,500 with a catch-up contribution capping out at $6,500 leading to $26,000 in retirement savings if you max out this source. - Add an IRA
If your employer does not offer a 401k or as a secondary investment, consider an IRA. The maximum contribution to an IRA in 2020 is $6k with another $1k for those 50 and older. With the two types of IRAs available, it is important to pick which one suits you best. Traditional IRAs are partially tax deductible, while a Roth IRA is not.
- Plan ahead
Knowing what finances, you will have available helps determine how aggressive you need to be right now. Consider other non-monetary investments you own that may trade for higher cash value when its time to retire. Also, getting an estimate from Social Security will help you get a clearer picture of what payouts are coming your way. Remember, retiring early will cost more in taxes than waiting until age 66, while waiting until age 70 shows higher social security payouts.
- Don’t touch your savings
During an unforeseen financial setback, it’s easy to turn to retirement savings for relief. While these accounts are open for withdrawals before retirement, you will have to pay a higher tax when withdrawing the money, leaving you with even less than the financial setback cost. Do not dip into your retirement funds unless necessary!
- Remember taxation
Even though you have an enormous life savings for your retirement, all the money is not available to you. When it comes time to withdraw, the state will require that you pay a tax on whatever amount you’re taking out. For most states, this is about $220 for every $1k withdrawn. To find out your tax bracket you can contact us or speak with an accountant. Keeping this in mind will help you determine exactly how much of that retirement you will be able to use.
M&A Wealth can help you prepare for your retirement. It is never too late to speak with a retirement planner. Email us or call us today to speak with a financial advisor in Houston.
Contact Us
[wpforms id=”245″]
