Maximizing Your Retirement

Here’s what you need to know to make sure your saving strategies are working.

Saving for your retirement can take time, there is no need to rush it. It’s not always easy to know if you’re on the right path. These guidelines will help you stay on track. We recommend you to save 15% of your income each year that you work until you’re 67.

If you are in your 20s or 30s, we recommend that you save an amount which is the same to your salary by age 30. It’s okay if you haven’t, this is just so you can get started as soon as you can.

If you are in your 40s or early 50s, saving is very important because you’re closer to retirement. We recommend you save 3 times your salary by age 40 and 6 times by age 50.

If you’re 15 years or less from retirement and short of your savings goal, you should try to increase the percentage of your income that you save because retirement is very close.

Guidelines for saving:

Maximize your 401(k) Employer Match

If your employer offers a retirement plan, make it a top priority to take advantage of the match– it’s pretty much “free” money. Companies that offer these types of plans typically match your contribution dollar-for-dollar.

Aim to save 15% per year

The golden rule is try to save 15% of your pre-tax income for retirement. This includes your contributions to workplace plans and IRAs, in addition to any matching or profit-sharing contributions from an employer.

Saving early and consistently is important. Saving in tax-advantaged retirement saving accounts such as 401(k)s, 403(b)s, Health Saving Accounts, or IRAs. If you cannot save the full 15%, don’t worry– just try to make small cuts in everyday spending. Even saving 1% more can add up.

Balance your Retirement with other Goals

You can only expand your income so far. Competing priorities can cause a headache. But remember, that time is very important in retirement saving. If you choose to save less now, you can either save more later, work longer, or spend less in retirement. You also do a combination of these.

How to grow your savings beyond the 401(k)

Putting money away is the first step. The next step is very easy: deciding where to put your savings. The guide below will show you a few places to put your hard-earned money, whatever your situation.

Take advantage of IRA savings

In 2019, you can earn: 

$6,000 if you’re under age 50

$7,000 if you’re age 50 or older

Traditional IRAs offer tax breaks, if you meet certain income requirements. Earnings can grow tax-deferred, but you have to pay taxes on withdrawals and required minimum distributions (RMDs). RMDs are required at age 72. IRA contributions are after tax, but earnings and withdrawals and free from federal tax.

Saving without a workplace account

If you don’t have a 401(k), it’s fine. Freelancers, entrepreneurs, and small-business owners still have advantages in tax saving. Alternatives to traditional 401(k) include SIMPLE IRA, HSA, SEP IRA, or Self-Employed 401(k). You’ll need to decide what you think is important the most: maximizing contributions or easy administration.

Making use of your old accounts

You’ve got 4 options for an old workplace account. Keep it with your old employer, roll over the money into an IRA, roll over into a new employer’s plan, or cash out. You can learn about rollover IRAs and other choices for your old 401(k) when you change/retire jobs. You need to consider all of your options and the applicable fees and features of each before moving your retirement assets.

Investing your IRA

Successful investors develop a plan, and they stick with it. Make the most of your savings with your savings with a portfolio that accounts for your personal situation, tolerance for risk, and time horizon.