While you may understand the importance of saving for retirement, you may stumble with maximizing your efforts. The earlier you learn how to save strategically, the better off you’ll likely be in your senior years. Learn a few tips that you can put to good use.
Look Into Double Retirement Plan Contributions
Depending on your profession, you could have the opportunity to double your retirement plan contributions. Professions such as healthcare workers, teachers, and nonprofit employees often qualify for such retirement plans. As of 2020, $19,500 is the maximum amount for 457 and 403 (b) retirement accounts.
Make the Most of Company Matches
Your employer may offer a company match for its retirement savings plan. If so, be sure to take full advantage of this opportunity. By letting this chance pass by, you’re essentially missing out on free money. True, you may be reluctant to increase your retirement contribution, as that means decreasing your overall take-home-pay, but by maximizing the company match, you make your golden years that much easier on yourself. Take a close look at your budget and lifestyle to determine just how much you need to make to survive, so you know how much more you can contribute to retirement.
Research the Retirement Savings Credit
If you are a lower- or middle-income taxpayer, you can take advantage of a tax credit for as much as half of your retirement plan contribution. Sit down with an accountant to see how much of a credit you qualify for, as it differs depending on your marital status and overall adjusted gross income.
Before Moving for Retirement, Research the State’s Income Tax Rules
Before or just as you reach the age of retirement, you may want to move to a different state. While making a final decision, look into each potential state’s income tax situation. Nevada, Washington, South Dakota, Florida, and Wyoming are examples of states that do not have state income taxes. Know that most states do not tax retiree’s Social Security payments.
Look Into a Health Savings Account
Senior citizens often experience several health complications. Contributing to a health savings account adds an extra layer of financial protection and peace of mind should you need expensive medical care during your retirement. Know that your contributions are tax-deductible, and any contributions you don’t use for medical expenses can remain in your account where their value can increase over time.
Take out a bit of time and work with a financial planner to ensure that you are financially prepared for retirement. A few tweaks to your current plan could pay off big time in the decades to come.