Do you feel like you’re behind on your retirement savings? If so, you’re not alone.
A staggering 55% of Americans surveyed stated that they were concerned that they cannot achieve financial security in retirement according to a survey by the National Institute on Retirement Security.
In today's blog, we’re going to walk you through 4 Strategies you can consider implementing to try to turbocharge your retirement savings.
1) Consider making “Catch-up” Contributions
After the age of 50 you are able to save above and beyond the contribution limits across various retirement account options.
For example, if you are over the age of 50 in 2025, you can contribute an extra $1,000 to your Individual Retirement Account making the total maximum contribution $8,000.
In your 401(k) or 403(b) account, you can contribute an extra $7,500 making your total allowable contribution $30,500. There are also new rules around an “enhanced contribution” for those aged 60-63 where they can contribute further to their retirement plan.
Pushing to put away even more money, even if it may clamp down on your cashflow and not feel so great in the immediate, could make a significant impact for your retirement.
2) Consider having multiple buckets of money for your retirement
One way to do this is to not only contribute to your retirement accounts but also start contributing to a NON-Retirement Oriented account to help boost your savings for retirement.
Despite the fact that a non-retirement oriented account doesn’t benefit from some of the features pre-tax or Roth retirement accounts might, saving in this type of account allows you to build up another bucket of money which could be used in a variety of ways in retirement.
In addition, a non-retirement oriented account may not have the same restrictions as a retirement-oriented account so you may be able to use the funds prior to retirement if need be.
3) Consider making after tax contributions
If you’ve maxed out your contributions for the year, additional after-tax contributions could be a possibility in your employer sponsored retirement plan.
A couple of specifics about after-tax contributions include the earnings growing tax-deferred, and taxes on earnings withdrawn being taxed as ordinary income.
One potentially enticing caveat is that you may be able to convert your after-tax contributions to a Roth IRA where the earnings and withdrawals will be tax-free.
4) Consider contributing to an HSA (Health Savings Account)
If you’ve gone through any type of planning for retirement, you may have discussed the fact that medical expenses can be one of the highest and most underestimated costs of retirement.
Despite utilizing Medicare, additional health related costs can add up overtime and later in life, the costs of in-home care or nursing facilities is not something we’d consider to be inexpensive either.
Some are able to utilize retirement or non-retirement investment accounts and some can even gain access to Medicaid.
Contributions to an HSA are pre-tax, earning grow tax free, an withdrawals are tax free as long as they’re used for eligible health care costs.
HSA’s can also be used to pay for a number of things such as Medicare premiums, long-term care insurance premiums, and medical related expenses.
The Final Word:
It’s never too late to save for your retirement. Remaining disciplined in your efforts and putting away more money than you think you can may be able to help bring you more confidence in your retirement plan. As always, if you’d like to discuss your financial plan with one of our advisors, we’d be happy to discuss!
Thanks for reading!
- The Rockline Team
Disclaimer:
Rockline Wealth Management (RWM) is a registered investment adviser located in Islip Terrace, NY. RWM is registered with the U.S. Securities and Exchange Commission. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission.
Rockline Wealth Management does not offer tax or legal services. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation.
All investment strategies have the potential for profit or loss. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client's investment portfolio.
Asset allocation and diversification do not ensure or guarantee better performance and cannot eliminate the risk of investment losses. The opinions expressed and material provided are for general information, and should not be considered a solicitation of financial advice or for the purchase or sale of any security.
Real-life and fictional examples given in this video should not be viewed as guaranteed outcomes when investing. Past performance is not indicative of future results and every individual’s investment circumstances are different. Individuals should consult their financial professional before implementing their investment plan.