If you have been contributing consistently to your retirement plan, then you are already on your path to a secure retirement. But are you doing everything you can to build your retirement nest egg? Capitalizing on your company retirement benefits package now can help to make your retirement that much more care-free. Here are five tips to help you build your financial future.
Annual Retirement Plan Review
Some people treat their retirement benefits, investments, and plan as a one and done sort of thing. But a lot can happen in the span of just a few years, and life events like marriage, a new home purchase, a new baby or a divorce can have an impact on how you should be saving for retirement and what tax implications there can be on the choices you make. If you have had a significant life event, you will want to review your plan with an advisor who can help you develop a strategy for your new life. It is also advisable to dust your plan off each year (consider it a spring cleaning) and see if there are things that might be changed or improved.
Is there room for a little more savings?
How many times do you buy lunch during the week? How many subscription services do you have that you don’t use? It is possible that there are some little every day expenses that you don’t need or don’t use that could, if instead saved into a retirement account, be working for you for years to come. Did you know that increasing your contribution by just one percent can have a monumental impact on your retirement income years from now? For a person earning $100,000 per year a one percent contribution over a 30-year period could amount to as much as an additional $140,000 in their 401(k) account.1
Even if you are frugal and your lifestyle is “lean”, it is important to remember that inflation will raise the cost of living over time. While your earnings and raises may adjust for you while you are still working, once you retire, your cost of living will continue to increase, but your income will stay just about the same. That is why it is so important to save and invest with inflation in mind. At your current rate of saving for retirement do you know whether you will be able to give yourself a cost of living adjustment in your retirement spend down plan? Asking and answering these questions is imperative to having a strong grasp on your retirement plan.
It’s not too late to catch up!
We all know that life happens and sometimes you encounter times when you aren’t able to save as much as you’d like. Fortunately, catch–up contributions are a way to help close that gap and get you back on track to your retirement goals. Currently the maximum annual contribution to a company retirement plan is $19000. But if you are over the age of fifty, you can contribute an additional $6000 on top of that. * They will serve to bolster your retirement savings and reduce your taxable income as well.
There is always a reason to put off savings for your retirement because life costs money, but the reasons aren’t typically as good as the reasons to be more austere and save as much as you can without becoming a hermit. The solution of course is not to deprive yourself of fun, spontaneity or things you need and occasionally just want. But try to find areas where you could save and put that money toward retirement.
Use the tips above to chart a course for yourself and, as always, we are available to offer consultation and planning advice that can help you set goals and plan ahead. Contact a member of our team to get started.
*not all plans offer catch-up contributions
This material is intended for informational purposes only. It should not be construed as legal or tax advice and is not intended to replace the advice of a qualified attorney or tax advisor.