Below are some of the best ways to start saving for retirement, even if you’re older than 50. Be sure to contact Leonard Financial Solutions for more ways to maximize your savings. With our retirement financial services in NJ, you can live comfortably and tax free!
Increase Your 401(k) Contributions
If your workplace offers a 401(k) or similar plan, now is a good time to increase your contributions if you’re not already doing so. Not only are these plans an easy and automatic way to invest your money, but also you can defer paying taxes on that income until you use it for retirement.
Plus, many people earn the most money during their 50s and 60s, which can move them into a higher tax bracket. By putting money into your 401(k), you’ll pay out less in taxes. Each year, the maximum amount you can contribute changes. Currently, you can contribute up to $19,500 if you’re under 50 and up to $26,000 if you’re 50 or older.
Consider Adding an IRA
If you don’t have a 401(k) plan available through your work, or you’re already funding yours to the max, you might want to consider adding an individual retirement account (IRA). The maximum you can contribute in 2021 is $6,000 and an additional $1,000 if you’re 50 or older.
There are two types of IRAs: a traditional IRA and a Roth IRA. With a traditional IRA, the money you contribute is generally tax deductible upfront. With a Roth IRA, you get your tax break in the form of tax-free withdrawals.
Be Aware of the Money Coming to You
Don’t forget that you will have money coming to you when you retire - you’re not completely at the mercy of what’s in your savings accounts. For example, you might be getting a pension from your work. If so, be sure to request an individual benefit statement every few years to see what benefits you’ve earned.
Also, if you contributed to Social Security for 10 years or more, you’re also eligible for Social Security payments. You can start collecting these benefits as early as age 62, though waiting until full retirement age will get you a bigger benefit. And if you can wait until 70, the benefit is even larger.
Retirement can feel overwhelming, especially if you feel like you’re already living paycheck to paycheck. But, there are many ways to maximize what you have so that you can retire when you want. To discuss your financial standing and how to prepare for retirement, contact Leonard Financial Solutions today.