No matter where you are in your stage of your career, just starting out after graduating college or winding down and getting close to retirement, it’s important to make the right financial decisions regarding your savings for your senior years. When you follow the best advice, you can enjoy a much more comfortable lifestyle after you have finished working. It’s important to choose the right strategies to help your retirement fund grow larger and faster, so it can support your daily expenses during the golden years. Chances are if you are still asking yourself “what does IRA stand for” then you are in need of some retirement planning lessons, and quick!
1. Apply Your Tax Refund to Your Retirement
One easy step you can take each year that can help increase your retirement account balance is to apply your yearly tax refund to your savings. Depending on the amount that you’re getting back, you may be able to easily put that into one or more savings accounts. If you haven’t started a retirement account, a tax refund check is a great way to begin a fund for retirement.
2. Take Advantage of Employer Contribution Matching
If you’re lucky enough to work for a company that provides retirement funds matching, you must take advantage of this. Maximize your contributions as much as possible, and watch as your employer adds the same amount to your account. After periodic contributions with this method, your retirement savings can expand even more than you ever thought possible, which also helps your potential to earn interest or dividends.
3. Choose Funds With Low Costs for Investment
Another way to get a better return on the money you put into your retirement account is to select investment funds with lower costs. Choosing mutual funds that don’t have a lot of overhead from things such as a broker’s commission may be the way to go to help your retirement truly mature. Be sure to consider things such as fees and service costs when you’re trying to decide which type of investment to choose from.
4. Transfer Your Accounts Directly
When you change jobs or need to transfer your retirement account for another type of reason, you can end up paying a lot of extra fees in the form of penalties or other service costs. One way to avoid this added cost is to transfer your accounts using a trustee-to-trustee transfer, or a direct transfer. With this type of rollover, your funds can be moved from one retirement account to another without incurring additional taxes or other expenses.
5. Consider a MyRA for Your Savings
Another popular option that can help you save money in the long run is to consider the newly created investment product called MyRA. Created in 2014, this retirement savings program sponsored by the U.S. government makes it a little bit easier for middle class people and others to start saving over a long period of time. This type of account may have some income limits, so it’s important to investigate all of the different requirements before opening your own.
6. Get Asset Management Help From a Financial Counselor
Navigating all of the different types of investments and retirement accounts on your own doesn’t always end up saving you more money in the end. The best thing to do is to select a financial adviser with experience and a solid reputation in the industry. A reputable advisor can offer you more than just information about what products are available and how to best achieve your retirement goals. For example, the role of the Fisher Investments Investment Counselor is to help determine client’s goals and how to figure the plan to achieve their retirement needs.
7. Defer Your Retirement Account Tax Payments
Finally, one important strategy that can truly make sense in the growing stage for your retirement account is to defer paying taxes. While you’re actively contributing to your savings, you should opt to not be taxed yet. That way, you can put in larger amounts of money over time. The larger amounts add up considerably over several decades of saving. When you’re ready to withdraw your money after you’ve retired, you can then pay taxes on the money, but at a lower rate, since your retirement income puts you in a lower tax bracket.
Reaching your financial goals over the time that you devote to your career can happen if you are patient and make smart decisions. Eventually, you are going to see your savings reach the level that is necessary to support you. When it’s time to start using your money, you want to ensure you have the right amount that can last well beyond your last day of work.