How To Start Super Charging Your Retirement Savings Today — FIbyREI
As you start to consider your financial future, it is critically important to think about your retirement savings . When you take action to boost your retirement savings today, you can breathe easier in the future.
We will take a closer look at the importance of retirement savings and how you can get started today.
Why saving for retirement is important
Before we dive into the vehicles that can supercharge your retirement savings, consider why you should save for retirement. The most obvious answer is that most of us don’t want to work forever.
Even if you would like to work forever, many are unable to make that a reality. Between health concerns and industry changes, you may not have the ability to work until the end of your life.
As you start to consider your financial future, it is critically important to think about your retirement savings . When you take action to boost your retirement savings today, you can breathe easier in the future.
We will take a closer look at the importance of retirement savings and how you can get started today.
Which is the best retirement plan?
As we discuss retirement savings, it is important to realize that there is not a one size fits all retirement strategy. You should save as much you need based on your particular lifestyle. The investment and savings vehicles that you are best for you will depend on your unique risk tolerance and long-term goals.
The best retirement plan for your situation will be a unique blend of options that suits your preferences and goals.
What is a retirement savings account?
A retirement savings account can be any account that you specifically set aside retirement savings within. The federal government designates certain retirement savings accounts with particular tax advantages. However, you can save for retirement in the vehicles that suit your needs best.
With that, we will explore a variety of retirement savings accounts for you to consider.
When you think of retirement savings accounts, you will most commonly think of employer-sponsored accounts. These include the 401(k) and 403(b) that you may have signed up for on your first day of employment.
These accounts allow you to contribute pre-tax dollars directly from your paycheck. The IRS sets contribution limits on these accounts each year. For 2020, the contribution limit is $19,500.
Other tax-advantaged accounts
Beyond the employer-sponsored options, there are other tax-advantaged accounts. A few include and . With these accounts, you can lower your overall tax burden based on your timelines.
As with the employer-sponsored plan, you will run into contribution limits. For IRAs, the contribution limit for 2020 is $6,000. For HSAs, the contribution limit for 2020 is $3,500 for an individual or $7,100 for a family.
Both offer valuable tax savings.
Taxable brokerage accounts
In addition to tax advantages accounts, you can stash your retirement savings in a taxable brokerage account. Within a brokerage account, you can buy and sell stocks, ETFs, mutual funds, and more.
Depending on your investment goals, a taxable brokerage account can be a good fit.
A final option for building your retirement savings strategically is through the use of other investments such as real estate. You can build a sizable real estate portfolio through steady investing.
How do I start a retirement plan?
If you are reading this, then you’ve likely decided to take retirement planning seriously. That is a great first step! Now it is time to craft a retirement plan to suit your goals.
To get started, take a close look at your expenses, income, assets, and current debt obligations. Depending on where you are starting from, you may need to pause here to build a solid financial foundation . Once you have a handle on your debt and a solid emergency fund , then you can focus on retirement savings.
Before you start a savings plan, consider what your retirement goals are. Think about what you want your retirement to look like because that will have an impact on your financial needs. For example, if you want to travel the world in retirement, then you’ll need more funding than if you plan to volunteer near home.
Once you have an idea of what you’ll need to save to create your goal retirement, map out a savings plan to meet those goals within your timeline.
How to super charge your retirement savings
In order to super charge your retirement savings, it is important to maximize your funds in the most effective way possible. With that, it is a good idea to start by maxing out your tax-advantaged retirement vehicles first. After that, you could contribute to a taxable brokerage account or in another avenue such as real estate investing.
Of course, the order of investment importance will depend on your goals. If you want to prioritize real estate investing, then you may start with those funding needs before maxing out other retirement vehicles.
As you look at the numbers within your timeline, you might realize that you need to cut your expenses or boost your income to meet your goals. If that is the case, then consider house hacking as an effective way to slash housing costs or take on a side hustle to quickly boost your income.
The bottom line
When you create your retirement savings goals, you may decide that you want to super charge your path to retirement. Luckily, you have many investment vehicles available and options to meet your savings goals.
How are you super charging your retirement savings? Let us know on social media!
Originally published at https://fibyrei.com on December 18, 2020.
