For most people, getting up and going to work on a daily basis is commonplace. While you may enjoy your job, there will come a time when retiring will be your number one priority. The only way you can retire without fear of going broke is by starting to plan and save money now.
A recent study found that nearly 42 percent of Americans have no retirement savings. Instead of allowing your golden years to slip away due to financial mistakes made in your 20s and 30s, now is the time to take action. With the help of an accountant, you can get the information needed to start your retirement savings account.
Read below for more information on how to hit the ground running with your retirement savings.
Some people think that saving for retirement is something they don’t have to worry about until they reach a certain age. This off-the-cuff attitude can lead to lots of mistakes being made in regards to your retirement savings. Instead of procrastinating when it comes to saving for retirement, take the bull by the horns and start today.
The biggest misconception consumers have is that saving money for retirement will prohibit them from having fun right now. In reality, you can save for retirement and still live the lifestyle you are accustomed to. Using revenue sources like an income tax refund or other unexpected money to fund your retirement savings is a step in the right direction. Once you have a budget in place, you will notice lots of extra money floating around that can be used for retirement.
Are you looking for a way to build your nest egg for retirement? If so, an individual retirement account (IRA) is a great option. Before you open an IRA, you need to understand the two options you have. Most Traditional IRA contributions are tax-deductible and allow your earnings to grow tax-deferred until retirement age is reached.
A Roth IRA is also a good option. These particular IRAs are usually funded with after-tax contributions. All of the earnings in these IRAs will be federal tax-free if you avoid using them until you are 59 ½. If you are unsure about which IRA is the best fit for your needs, consult with a knowledgeable accountant. They will be able to take into consideration your savings goals and your yearly income before making suggestions.
Keep in mind that there are contribution limits for both Traditional and Roth IRAs. People who are under the age of 50 can contribute $6,000 a year to their IRAs. If you are 50 or older, you can contribute up to $7,000 to your IRAs.
Another great way to hit the ground running with your retirement savings is by contributing to your 401(k). Many employers offer traditional 401(k) plans to their employees. Generally, these plans will provide an employer’s match clause. This means that your employer will match any contributions you make to this plan. The more money you invest in your 401(k) plan, the easier it will be to take full advantage of the employer match deal being offered.
Current 401(k) yearly contribution limits for people under the age of 50 is $19,000 a year. If you are 50 or older, you can contribute $25,000 to your 401(k).
Are you ready to start your retirement planning? Contact Ahad & Co. today to find out how we can help. We offer free consultations to first-time clients and will customize a retirement planning strategy to fit your unique needs.