Planning for your retirement is something you should begin to think about whether you just started a job or you’re just about done. The truth is that it’s never too early, or too late to start saving and investing. For those who didn’t start early, know that other people are on the same boat as you. No matter where you stand in life right now, you are capable of boosting your retirement savings. Here are some tips that can help you grow and better your retirement plan.
If you haven’t already, start saving and investing today! Compound interest allows you to generate earnings off your assets. By investing a smaller amount of money over a longer period, you can make a greater impact than investing a larger amount of money in a shorter amount of time. With that being said, start saving for your retirement as young as you can. Putting a little something aside every month can make a huge difference.
Work on your 401(k)
Many places offer eligible employees a 401(k) plan where they can add pre-tax money to their retirement account. Let’s you’re in the 14% tax bracket and want to put $200 into your 401(k) every pay period. The money will come out of your paycheck before federal taxes are taken away, meaning instead of taking home $172 in your paycheck, the full amount will be put into your savings plan. This helps individuals invest more of their income without it feeling like they’re cutting into their monthly budget. If you happen to leave your employer before retirement, here are a few choices on what to do with your 401(k) account.
Open an IRA
Consider building more retirement savings aside from your employer with an individual retirement account. There are two different types of IRAs that you can choose from. There’s the traditional one that gives your earning the chance to grow tax-free until you begin to make withdrawals during your retirement. The Roth IRA includes after-tax contributions which means that once you retire your earning are federal-tax-free if they were in the required holding period. Many factors play a role in choosing an IRA, so do some research before picking which is best for you.