Retirement is expensive, plain and simple. Experts estimate that you will need 70 percent of your pre-retirement income (90 percent or more for lower earners) to maintain your standard of living when you stop working. It’s time to take charge of your financial future today.
Invest in Your Future
There are a few steps that can be taken to maximize pre-tax retirement savings:
- Invest in your employer’s pre-tax savings plans, such as a 401(k).
- Put the maximum amount allowed into your employer-sponsored retirement accounts. If you cannot afford the maximum, try to contribute enough to maximize any employer matching funds.
- Place your money into an Individual Retirement Account (IRA). When you open an IRA, you have two options – a traditional IRA or a Roth IRA.
- Avoid dipping into your retirement savings, as you will lose principal and interest and may lose tax benefits.
- If you change jobs, rollover your savings directly into an IRA or to your new employer’s pre-tax retirement plan.
- Start saving early. Devise a savings plan, stick to it, and set goals for the future.
- Study your investment choices carefully. The more you know about investing, the more likely you will choose wisely.
- Learn as much as you can about your plan’s administrative fees, investment fees and services fees to avoid reducing the amount of your retirement benefits unnecessarily.
Investing pre-tax will benefit you right now and during retirement. For instance, if you are in the 20 percent tax bracket, your paycheck will only be reduced by 80 cents for every dollar that you invest! You also won't have to pay taxes on those contributions or earnings until you start to withdraw them.
Planning for retirement is hard, but adulting is harder.
Download our FREE guide to learn more about the steps you should be taking today to ensure a bright future!