Retirement Savings Hacks
Retirement savings can be a daunting task, but with the right hacks, it can be a breeze. In this blog post, I will share some of the most effective retirement savings hacks that you can use to secure your financial future.
Why is retirement savings important?
Retirement is a time when you should be able to enjoy the fruits of your labor and not worry about finances. However, without proper planning, retirement can be a stressful time. According to a survey conducted by the American College of Financial Services only 23% of Americans have a written retirement plan. This is a concerning statistic, as it means that the majority of Americans are not even sure if they are or are not prepared for retirement. Therefore, it is crucial to start saving for retirement as early as possible.
Retirement savings hacks
- Take advantage of catch-up contributions: If you are over 50, you can make catch-up contributions to your retirement accounts. For 2024, the maximum catch-up contribution limit for 401(k)s is $7,500. By taking advantage of catch-up contributions, you can make up for lost time and boost your retirement savings.
- Consider a Roth 401(k) if your employer allows it: A Roth 401(k) is a retirement account that allows you to contribute after-tax dollars. This means that you will not get a tax deduction for your contributions, but your withdrawals in retirement will be tax-free. Also, unlike Roth IRA’s the Roth 401(k) has no income limits, so high earners are able to take advantage of them even if they are unable to contribute to a Roth IRA.
- Voluntary after-tax contributions for in-plan Roth conversion (Super Roth strategy): If your employer’s plan allows for it (many do not), consider making voluntary after-tax contributions to your retirement account. You can then convert these contributions to a Roth balance immediately, which can be beneficial if you expect to be in a higher tax bracket in retirement than you are now. This option has the potential to allow you to contribute an additional $46,000 of post tax money beyond the standard contribution limits. As always we suggest consulting your accountant and financial advisor regarding if this strategy is right for you.
- Consider a Health Savings Account (HSA): An HSA is a tax-advantaged account that can be used to pay for qualified medical expenses. However, it can also be used as a retirement savings vehicle. Contributions to an HSA are tax-deductible, and withdrawals for qualified medical expenses are tax-free. Additionally, after age 65, you can withdraw funds from your HSA for any reason without penalty (however you will have to pay taxes on the withdrawals)
- Get professional advice: If you are not sure where to start with retirement savings, consider seeking professional advice. A financial advisor can help you create a retirement plan that is tailored to your needs and goals.
- Automate your savings: One of the easiest ways to save for retirement is to automate your savings. Set up automatic contributions to your retirement accounts each month. This will ensure that you are saving consistently and will help you avoid the temptation to spend the money elsewhere.
- Reduce your expenses: Another way to save for retirement is to reduce your expenses. Look for ways to cut back on your spending, such as eating out less or canceling subscriptions you do not use. By reducing your expenses, you can free up more money to put towards retirement savings.
In conclusion, retirement savings is an important part of financial planning. By following these retirement savings hacks, you can set yourself up for a comfortable retirement. Remember to start saving early, take advantage of employer-sponsored retirement plans, maximize your contributions, consider a Roth IRA, automate your savings, reduce your expenses, and seek professional advice even if just for a second opinion. As the Chinese Proverb goes, “The best time to plant a tree was 20 years ago. The second-best time is now.” So, start saving today and secure your financial future.
At LaCour Wealth Management, we specialize in providing second opinions to clients who already have a financial advisor. We can help you evaluate your current portfolio and provide our honest feedback and recommendations. We understand that investing can be a daunting task, but we’re here to help. Our team of professionals can guide you through the process and help you make informed decisions about your investments. If you have any questions or would like to learn more about our services, please call us at (630) 579-3804 or email me at jp.lacour@raymondjames.com
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This blog post was created with the help of Bing Chat Enterprise, an AI-powered chatbot developed by Microsoft. Raymond James is not affiliated with and does not endorse the opinions or services of Bing Chat Enterprise or Microsoft.
The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete, it is not a statement of all available data necessary for making an investment decision, and it does not constitute a recommendation. Any opinions are those of LaCour Wealth Management and not necessarily those of Raymond James.
Please note that this blog post is for informational purposes only and is not intended as investment advice. Every investor's situation is unique, and you should consider your investment goals, risk tolerance and time horizon before making any investment. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including asset allocation and diversification. Prior to making an investment decision, please consult with your financial advisor about your individual situation.
