It’s Never Too Late to Start Saving for Retirement. Even if your retirement savings feel a bit light, there’s no reason for gloom and doom. You can take steps right now to help put your savings back on track.
Your task now is to build a nest egg as quickly as possible. By allocating more of your income to savings and capitalizing on your assets, you can get started putting money aside to support your retirement. Read on for four easy steps you can begin implementing today.
Max your 401(k). Take full advantage of a 401(k) offered at work by making the maximum contributions you can afford. In 2022, you can contribute up to $20,500/year of your income to your 401(k), plus an additional $6,500 if you’re 50 or older.1 This money is tax-deductible now and will be taxed upon withdrawal at your (usually lower) future tax rate. Your employer may also contribute to your 401(k), so make sure you take full advantage of this perk by contributing enough to receive the maximum matching funds. If you’re 50 and contribute $24,000/year for 11 years, you’ll have saved $264,000 before any potential growth. That will go a long way toward funding your retirement.
Consider contributing to a Roth IRA. Roth IRAs allow your contributions to grow tax deferred. Although you don’t get a tax deduction on the money contributed, you can withdraw from your Roth IRA without any taxes (assuming you follow the rules), thereby maximizing your IRA distributions in retirement. In 2022, you can contribute up to $6,000/year to your IRAs ($7,000 if 50 or older).2 Your Roth IRA contributions are income limited. For example, if you are married and file jointly, the money you can put into your Roth faces limitations when y our modified adjusted gross income exceeds $204,000.
Understand how to plan properly. You know you need to save, but do you have the most effective plan in place? To help maximize your retirement savings it helps to know how much you should put aside each year and the rate of return you will need to meet your retirement goals. You should also determine if you have the appropriate risk tolerance for your comfort level, age, and retirement expectations. Talking to a qualified financial professional can help you connect the dots in your overall retirement plan.
Have a plan for extra funds. If you find yourself with some unexpected money (inheritance, work bonus, tax return, etc.) you have a few options. If you haven’t started an emergency fund, now would be a good time to do that. The idea is to have three to six months of your income saved. By doing this you may be less tempted to dip into your retirement funds to deal with unexpected financial emergencies. Another option would be to max out your Roth IRA for the year, if you haven’t already.
You are not alone. Many adults haven’t saved enough for retirement, but proper planning can put the odds back in your favor. I invite you to contact me to review your retirement plans and budget. We can explore all your options and create a strategy to help you address your unique financial challenges.
A Roth IRA offers tax deferral on any earnings in the account. Qualified withdrawals of earnings from the account are tax-free. Withdrawals of earnings prior to age 59 ½ or prior to the account being opened for 5 years, whichever is later, may result in a 10% IRS penalty tax. Limitations and restrictions may apply.
Lean on me. As a financial professional, I’m here to help you with your financial goals. If money management has you flustered, call me for an appointment. Together, we can work out strategies to save you time, lighten your load, and help you implement your financial plans.
Wherever your goals take you, we can help you get there. We help our clients to navigate these and other important decisions that impact their economic future.
Click the link below or give us a call today at
Securities and advisory services offered through LPL Financial, a registered investment advisor, Member FINRA/SIPC. LPL Financial and GrandView Insurance & Financial Services LLC are separate entities.
This material was prepared for Chris Larkin and does not necessarily represent the views of the presenting party or their affiliates. This information has been derived from sources believed to be accurate. Please note—investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting, or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax, or legal advice and may not be relied on for the purpose of avoiding any federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.