Retirement Saving Tips

Sharon is passionate about helping you save for your Dreamed-Of Retirement. The earlier you start saving for retirement the better and saving for retirement should be one of your top priorities no matter how old you are. Time is one of your biggest assets when it comes to saving and investing. The most important thing is that you start. Regardless of where you are now, follow these tips for growing your nest egg faster and with less stress.

1. Contribute to Your 401(k)/403(b): The first and most important rule is if you have a 401(k) through your employer, contribute to it. With a 401(k)/403(b), you’re contributing pre-tax money which means you’re contributing money before taxes are taken out. This lowers your gross income which can potentially lower your overall tax bracket. Not only that, but the money in your 401(k)/403(b) grows tax-deferred. You don’t have to worry about taxes being taken out until you start withdrawing funds from 401(k)/403(b). When taxes are not taken out each year, your money grows much, much faster.

2. Get the Free Money Your Employer Offers: Many employers offer a match when you make contributions to your 401(k)/403(b). This is like free money! Always contribute at least enough to your 401(k)/403(b) to maximize your employer’s match. If you don’t, it’s like throwing away free money and who wants to do that?

3. Get professional help with your current 401(k)/403(b) if your employer allows. Thousands of companies now offer a Self Directed Brokerage Window for their employees to be able to have Professional Money Management and the help of a Professional Retirement/Financial Advisor—WHILE STILL WORKING and CONTRIBUTING.

4. Open the IRA: Opening an IRA can help you build your next egg. Depending on your income and whether you or your spouse have a retirement plan through work, you may be eligible to open a Traditional IRA. All IRAs grow tax-deferred but with a Traditional IRA, your contribution is tax-deductible. If you meet income eligibility requirements, your other choice is to open a Roth IRA which is funded with after-tax dollars. You don’t get the immediate tax deduction, but it still grows tax-deferred and after age 59 ½, and when you take money out, your withdrawals, including earnings are free from federal tax.

5. If You’re Over 50, Take Advantage of Catch-Up Contributions: Annual contributions to IRAs and 401(k)/403(b) plans are limited. However, once you reach age 50, you’re able to make catch-up contributions to IRAs and 401(k)/403(b)’s. Catch-up contributions can really help increase your retirement savings even if you have started late or haven’t been able to save as much as you would have liked.

6. Automate: You’ve probably heard the old adage, “pay yourself first.” It’s much easier to set a certain percentage or dollar amount aside that gets deducted and automatically invested for you in an IRA or other retirement account before you even see your paycheck. When you automate, it takes the pain and decision-making process out of saving. You don’t miss the money because it’s all taken out before you ever see it. I know I have to do this for myself or I won’t do it.

7. Know How Much You’re Spending and Reduce It: Often, what we think we’re doing and what we’re actually doing are two completely different things. It’s important to know where your money is going each month. You may be spending more money than you know in places you don’t expect. Keep a spending journal for a month and write down every dollar that goes out and what it was spent on. You may be surprised. Once you know where the money is going each month, it will be much easier for you to know where you can cut spending. You can request a Your Retirement GPS ™ Budget Worksheet to help you with this. Just email us.

8. Stash Unexpected Windfalls: Anytime you receive a raise, get a bonus or receive money you weren’t expecting from any source, commit at least half of this found money to your retirement plan. Avoid the temptation to splurge. Treat yourself to something small but put the rest of this money toward your future and into your retirement plan. You’ll be glad you did. It can make a big difference over time.

9. Delay Social Security: Although you can start taking Social Security at age 62, for each year you can delay taking it until age 70, your monthly benefit increases. Not only does it increase your benefit, but if your spouse outlives you, it will also increase their survivor benefit. Sharon can help you figure out the maximum time to claim Social Security with state of the art Social Security Maximizer software.