Planning Ahead: 4 Tips For Retirement Savings
Tuesday, March 28, 2017, 6:00 AM | Leave Comment
It is never too early or too late to start planning for retirement.
Whether you are a college student who just got his or her first job or are in your 50s and looking to retire in the next decade, there are savings strategies that can help anyone reach their financial goals.
What are some strategies that you can use to maximize your retirement dollars?
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Contribute The Maximum Amount Each Year
If you are under the age of 50, you can contribute $5,500 to an IRA in 2017. You can also contribute $18,000 to a 401k, and that amount may increase if an employer match is made.
Those who are over the age of 50 can contribute an extra $1,000 a year to their IRA and an extra $6,000 to their 401k in 2017.
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Talk With A Financial Planner
Are you worried that your asset allocation is wrong or that your investments may be a tad too aggressive for your liking?
Working with a financial professional, like those at Family Financial Partners, can make it easier to determine how you can tailor your portfolio to best meet your needs depending on when you want to retire.
Professionals may also teach you how to create a budget, reduce debt or take other steps to improve your financial situation.
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Watch Out For Fees
The value of your account will grow exponentially because of compound interest.
However, your fees will also compound as your account grows. Therefore, a 1 percent fee could translate to tens of thousands of dollars lost over the course of your lifetime.
As a general rule, a plan that offers lower fees is generally superior to one that charges higher fees.
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Know The Difference Between Roth And Traditional Accounts
A Roth IRA or 401k allows you to contribute with after-tax dollars. The money grows tax-free, and there are no income taxes when you take the money out.
A traditional IRA or 401k allows you to contribute with pre-tax dollars, and you pay income tax on the withdrawals during retirement.
Having one of each account can help you reduce your tax burden today as well as later on in life.
While retirement means different things to different people, the goal is to have the financial security to control your destiny in the future. Ideally, you will have the option of whether or not to work as opposed to needing the money to make ends meet after age 65 or 70.
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