Lacking a concrete financial backup before and/or after retirement is one of the mistakes most people in the millennial generation are making. According to Retirement Planner San Diego, the best time to start saving for your retirement plan is as early as possible. Even those who haven’t started saving for their retirement can still do that. Your retirement savings plan acts as a backup kitty bank just in case the financial plan set aside by your employer doesn’t come through as expected. Below are important ideas that you can implement in order to boost your 2019 retirement savings. These ideas will help you this year and the years to follow to minimize the fees which reduce your returns and the investment costs.
1.A $500 contribution to your savings (401(K))
This year the contribution limit to ones 401(K) has increased from $500 to $19,000. This means you have an opportunity to defer paying close to $42 monthly in tax due to this new regulation. This year you can increase the contribution you make to your retirement plan. For individuals who are 50 years old and more, their contribution limit is an additional $6000. Older citizens have an opportunity to defer approximately $25000 in their 401(K) retirement plan this year. Your contributions to your 401(K) are not taxed until you decide to make a withdrawal from your account.
2. Giving your IRA an extra $500
Just like the 401(K), the contribution limit for IRA has also been increased to $6000 this year. Workers who fall in the 24% tax bracket can reduce their tax expenses by $1140 is they still make the traditional IRA contribution. In 2019 the workers who are older than 50, can make their catch up contributions of up to $1000. With IRA one gets an opportunity of starting small in their retirement savings plan and increasing their contributions as time passes by. The idea is to come up with a realistic savings goal for 2019, which is also realistic then start working on it.
3. 401(K) Match
It’s one of the fastest ways one can increase their savings balance. In case your employer has the ability to match the funds which you are saving in your retirement plan then it’s your responsibility to make sure that the minimum set contribution is made to your savings account. With time this contribution will grow over time and become a better savings bank for you.
4. Vesting in the 401(K) plan you have
It’s only after you vest your 401(K) plan that you will have an opportunity to keep the retirement contributions made by your employer. There are some organizations which offer immediate vesting to their staff, others have policies which require one to work for a few more years in the company before the staff can access the contributions. The trick is to make sure you gain the most out of the retirement contributions of your employers even if it means sticking around for a few weeks or months till you can vest into your retirement savings plan.
5. Setting a Roth account that is tax-free
If you make a contribution that is after tax to your account be it, IRA or 401(K) then you will be able to enjoy investment growth withdrawals during retirements which are both tax-free. Sadly you won’t get a tax break in the year in which you will be making the contributions to your Roth account. The benefits from your Roth account will, however, accumulate over time. Hence no need to get worried about the possibility of suffering a heavy tax bill after retirement.
6. Lower cost funds
When shopping for retirement deals make sure you look at the ones that have low-cost funds. There being a possibility of you holding onto your retirement savings for decades before using them, means you have to make sure the cost funds are very low. A careful look at the expenses and cost ratios related to your retirement plan. Make sure that at the end of each year you get a disclosure statement from your 401(K) plan. The statement should carefully explain the cost of each fund in your 401(K) plan
Last year there major swings in the stock markets and some of your holdings might not match with your targeted asset allocation. This year you should rebalance your asset allocation which you have deemed to be most appropriate after consideration of risk tolerance. The older you get it is recommended you move a large chunk of your investments to ventures that are low risk. You will have to carefully reexamine your investment strategy as you move closer to retirement.
8. Keeping track of the Social Security Account you have
Thanks to the internet there are no longer paper methods of one to check their social security account. The online way of checking ones social security account is much more convenient. You just need to log in into your online Social Security Account and get your statement. Make it a habit to check your social security account a few times in a year especially when looking at your tax return. This will help in determining how much you are getting from the value of your money.
9. Savers credit
First, you need to check if you meet the minimum requirements needed by the savers’ credit. The saver’s tax credit is available for both unmarried and married individuals. The credit is normally worth from 10% to 50% of the contributions you make for your retirement savings, to a maximum of $2000 for single individuals and $4000 for couples. Apart from the savers’ credit, there are other claims that can be made: the traditional account contribution to your retirement plan and tax reductions.
10. Keep off retirement account penalties
If you make a withdrawal from your IRA or 401(K) accounts too early or too late then you will experience some penalties. Before you make any withdrawal determine if you qualify for any penalty exemptions if you don’t then its best to postpone the withdrawal time. When it comes to a feasible and workable retirement plan you just need to focus on the things that you can improve and control in your retirement finances, the other things which are beyond control you should not worry you at all. More focus should be placed on simple things likes your spending budget and your risk plan and less time on the stock markets.