It seemed like yesterday you landed your first job, opened your first savings account, and funded your first 401k. Then you blinked, and suddenly retirement is right around the corner. If you find yourself scrambling to save more for retirement, take a deep breath. There are financial vehicles and strategies available to you that will help you make the most of your money and your work-free years.
Grow Better With Age
If you are 50 years old or older, your employer's retirement savings plan may allow you to make "catch-up" contributions of up to $6,000 this year in addition to up to $18,000 in elective deferrals. That's a potential $24,000 of additional savings toward your retirement per year. You can also take advantage of a similar opportunity with IRAs. Individuals aged 50 and above can contribute $1,000 more than their younger counterparts.
Adjust Your Sights
The closer you get to retirement, the harder--and less likely--you'll be able to recover from a significant market downturn. If you want to avoid what happened to the thousands of near-retirees in the "Great Recession" of 2008 and 2009, it's may be a good idea to redistribute a larger portion of your stock portfolio into bond and cash equivalent investments, which tend to offer more steady returns.
Don't get too conservative, however, unless you have significant cash reserves; stock holdings historically outpace inflation and other savings mechanisms, so if you have some ground to cover, they still may be worth the risk they present.
Keep Working It
Want a surefire way to have more money after retirement? Keep working. The longer you earn full-time income, the more money you'll have to fund your retirement, and the longer that money has a chance to grow before you need it. Also, the longer you work, the fewer years you'll have to fund retirement. However, this is a win-win only if you have the energy and the motivation to keep working.
See It From The Other Side
If you are saving everything you can and can't work another minute, the next thing you should consider is how you'll be spending your money. Are there ways to save on expenses that will let you squeeze a few more years out of your current funds? Is there a way to strike a balance between funding and spending that result in a happy and enjoyable retirement?
Consider The Tax Implications
It's always a good idea to explore the tax implications of each and every one of your retirement savings accounts well before you need to tap into them. Your financial planner can go over each of your accounts with you to determine your appropriate course of action. Your goal here, of course, is to be able to make the most of the money you've socked away.
Postpone Social Security Benefits
Did you know that every year you postpone your Social Security benefits could increase the amount you eventually receive by about 8%? It's true. If you were born after 1943, are under the age of 70, and decide to put off taking on your Social Security benefits for as long as you can, your money is eligible for a decent boost.
Of course, all of this advice means nothing if you don't have a clear idea of what you want retirement to look and feel like. Funding this next phase of life, which could last for 20 years or more, is important, and having a solid plan, and a good team of advisors, in place is equally so.
If you have a few moments, we strongly encourage you to take a retirement assessment (like the one we link to below) to gauge what activities, risks, values, and ideas are important to you as you enter the work-free stage in your life. The link below provides invaluable information to your Sioux City financial advisor, and can help you make the most of your retirement, and your retirement earnings.
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