The distance between present and the future seems short when considering retirement. At this point in time, you are too busy to consider saving up for your autumn years. That distraction could end up keeping you struggling well past your sixties.
If you are not saving for retirement, then you must start now! Nearly 30% of private sector workers do not have a retirement savings plan. Moreover, even fewer than half know how much they need to invest for a 401k plan. Build peace of mind as you earn to support yourself and your family. All you need is careful investment and consideration to ensure you live comfortably in your golden years.
Here are a few tips that will help you maximize your retirement savings.
Even if you’re heading into your 50s without a retirement plan, there’s still time to save. While it’s common to start investing at age 25, older clients may have to contribute large to meet an equal balance.
If you were to invest $75 per month at a rate of 8%, then you would earn $263,571 by age 65. Contributions are often limited to those under 50. Those reaching 50 or older are able to go above the $1000 dollar limit. Catch-up contributions made by older investors can go anywhere from $4,000 to $6,000.
Open an IRA
You might be familiar with 401k and 403b company matches. As long as you contributed 5% worth of your yearly earnings, you should be getting tax-free money from your employer. Not all jobs last forever though, and you’ll need to roll those stagnant earnings into an Individual Retirement Account.
A Traditional and Roth IRAs are perfect receptacles for your savings. Contributions to a traditional IRA are tax deductible, but retirement withdrawals may be taxed. Roth IRAs, on the other hand, offer tax free withdrawals. Taxes will be charged if you are not 59 years or older.
Health Savings Accounts
Budgeting for health coverage becomes increasingly vital as the years wear on. It’s possible to combine your retirement savings with health needs by registering for a Health Savings Account.
The first step is to apply for a High-Deductible Health Plan. Through this you can apply for an HAS if you are not on Medicare or claimed as a dependent on someone’s income taxes. Deductibles cannot exceed $12,700, but monthly premiums remain low. A spouse or family member can contribute to your account that can be used to cover most major medical expenses. Any funds contributed will rollover into the next year.
Choose the Right State
When people talk about moving to Florida for their retirement, they aren’t going just for the warm beaches. States like Florida, Nevada, Texas, and Washington offer significant tax breaks for pensioners.
Before you go looking up houses for sale in Colorado Springs, it’s important to consider the prospective state’s tax laws. While Social Security is relatively tax-free, dividends and interests might be. Any state is a good choice if you’re savvy about savings.